U.S. crude oil stocks drop

U.S. crude oil stocks drop

Oil prices wavered between small losses and gains Thursday, buffeted by continued concerns about growing USA crude production that were offset by signals that other major producers remain in favor of extending their output-cut agreement into the second half of the year.

Patrick Pouyanne, the chief executive of French oil and gas giant Total, said on Thursday prices could fall again by the end of the year due to a rapid increase in USA shale production.

As Saudi Arabia is overcomplying with the OPEC production cuts and showing fellow OPEC members a "lead by example", the Kingdom cut its crude oil exports in February to the lowest level since May 2015, while Saudi refineries processed record amounts of supply for domestic use.

Last week the prices of oil had gone past $53 a barrel following the push by some producers to extend the OPEC supply cut deal by the more than 6 months that had been settled on.

US crude for May delivery recently traded up 2 cents, or 0.04%, to $50.46 a barrel on the New York Mercantile Exchange.

Crude futures were trading more than 30 cents higher in Asia early Thursday, but the recovery, against a rout of almost $2/barrel at the previous day's close, was more likely bargain-hunting than the start of a full correction, as the weekly counter-seasonal build in United States gasoline inventories continued to weigh on market sentiment.

"The U.S. market perhaps doesn't believe in the oil market balance that OPEC would have us believe", said Hans van Cleef, senior energy economist with ABN AMRO.

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Both benchmarks had traded more than 50 cents higher earlier in the day, but gains eased at the start of USA trading hours. Despite a drop in US crude stocks last week, an unexpected 1.5-million-barrel build in gasoline stocks drove prices more than 3.5 percent lower on Wednesday.

OPEC members Saudi Arabia and Kuwait signaled that the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, would likely extend their oil output cut beyond June.

The report by the American Petroleum Institute also showed that stockpiles of gasoline actually went up by about 1.37 million barrels.

Crude inventories fell by 1 million barrels in the week to April 14, compared with analysts' expectations for an decrease of 1.5 million barrels.

"Saudi's done a good job of managing the rhetoric", said Michael Hiley, a trader at LPS Futures LLC.

Patrick Pouyanne, chief executive of French oil and gas giant Total, said on Thursday prices could fall again by the end of the year, citing US shale production.

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