Oil prices fell to a two-week low amid concerns that the global supply is far too high, and if the downward trend isn't bucked crude could decline for the third day in a row. Stocks have dropped sharply in the last several weeks and have fallen below levels seen at this time a year ago, but are still higher than where inventories have been in this decade.
At a press conference in the United Arab Emirates, Saudi Energy Minister Khalid al-Falih said that "there is consensus building but it's not done yet".
On the NYME, the May delivery for West Texas Intermediate dropped by 24 cents to reach $52.41 per barrel. The May contract expires at settlement, and the more actively traded June contract recently gained 10 cents, or 0.2%, to $50.95 a barrel. Brent, the global benchmark, gained 26 cents, or 0.5%, to $53.19 a barrel on ICE Futures Europe. That surprise build in gasoline, along with an increase in USA production, pressured prices.More news: White House Patriots Crowd Size Stirs Controversy
"The domestic increases continue to not only offset overseas production cuts, but potentially more importantly, they also weigh on OPEC's morale as they are watching market share continue to slip away as a result of their own policy actions", he said in his latest report.
Traders said that the gains came on the back of a reduction in commercial U.S. crude stocks, which fell by 1 million barrels last week to 532.34 million barrels, according to the U.S. Energy Information Administration (EIA).
OPEC members Saudi Arabia and Kuwait signaled that an effort by the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, to cut oil output was likely to be extended beyond June. The report showed that Saudi Arabia's crude exports declined from 7.7 million barrels per day in January to 6.96 barrels per day in February.
Slight production reported Wednesday also reinforced widespread anxiety that US shale producers are becoming more capable in churning out oil at a lower price, analysts say. The decline was triggered by the surprise build in US gasoline stockpiles that point to weaker-than-expected demand at a time when consumption of gasoline usually rises.