For some, there's never been a better time to buy. That's increasing the burden on the world's biggest producers, who need to stick to their pledges to cut supply just to keep prices from falling, said Kho Hui Meng, the head of the company's Asian arm. This true on several levels but right now I am simply stating that OPEC does not wield the same level of control over oil markets that it once did.
Gasoline demand also perked, as USA gasoline futures were up 2.4% after the report.
Despite an overall drop in OPEC crude production in April, Saudi Arabia's output increased, according to a monthly report from the cartel out Thursday. Subsequent signals from Saudi Arabia and Moscow that they could extend cuts into 2018 failed to trigger much of a price recovery.
Bank of America Merrill Lynch said this was also due to a slowdown in oil demand.
Oil prices rose more than 3.5 per cent on Wednesday, bolstered by the biggest one-week drop in USA inventories so far this year, and after Iraq and Algeria joined Saudi Arabia in supporting an extension to OPEC supply cuts. The U.S.is now the third largest oil producing nation in the world and its share is growing. It was trading at $46.61 before the supply data.
Across Europe, the French Cac 40 and German Dax ended the day almost flat, up just 0.05 per cent and 0.07 per cent, respectively. Floating storage has started to decline in places like Singapore. The country remains a hurdle to the extension of OPEC deal. Bulls may be of the opinion that the OPEC led coalition can enact supply cuts that will drive prices up.
"They'll likely agree to extend into the second half of 2017, but the risk is higher that they'll leak extra barrels onto the market", he said. Two OPEC members are exempt from the cut-Nigeria and Libya- and a third member, Iran, was allowed to boost output to a specified level.More news: Justin Bieber fever grips India ahead of first concert
Total group output fell by 160,000 barrels per day (b/d) to 31.93 mb/d in March, less than 200,000 b/d off the target of 31.75 mb/d.
Oil has given up all its gains since the Organization of Petroleum Exporting Countries and other producers signed a deal late past year to limit supply for six months from January.
The oil market is looking for growth but there's no growth, Vitol's Kho said, adding that the refiners may only get approval for the same volume of imports as past year.
However, after Brent fell below $50 a barrel last week, analysts said producers felt forced to act. OPEC did not publish a compliance number.
A fourth refiner said it had not received any notifications by today.
"We've been waiting for evidence of inventory declines globally and are focused on today's data because the United States is most transparent", Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC who helps manage $US17.2 billion, said by telephone.