Oil prices continued to fall on Wednesday, trading at four-month lows amid concern over the massive buildup in U.S. crude stockpiles.
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Oil futures are heading closer to the levels they traded at before the Organization of the Petroleum Exporting Countries' deal to cut production sent crude prices sharply higher.
Brent crude fell 1.63% to $50.13 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.45% at $47.55 a barrel.
U.S. oil prices fell sharply overnight after industry group American Petroleum Institute said U.S. commercial crude inventories likely rose by 4.5 million barrels in the week ended March 17.
If confirmed by the U.S. Energy Information Administration later Wednesday, this would be the 10th consecutive weekly growth in oil stocks.
"Crude oil is really going for a test of the lows," said Olivier Jakob from the Switzerland-based Petromatrix. U.S. stocks "are going be at record high levels," he said.
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Investors are also eyeing increasing production in the U.S., where companies have been pumping over 9-million barrels a day for the past four weeks.
U.S. oil operators have invested heavily in technology over the past two years, making them more competitive against Middle Eastern and Russian rivals, analysts say.
Analysts say OPEC and major producers like Russia need to extend their output cut if they hope to make a dent in the global glut.
"Even if for the time being it may be seen differently, it's not OPEC which is setting the price, it's very much the U.S. oil production," said Eugen Weinberg, an analyst at Commerzbank. "OPEC are not anymore in the driving seat and the sooner they realize it, the better."
Saudi Arabia, the world's largest oil exporter, has said it would support stretching out the deal if necessary, but analysts are concerned that Russia may not commit.
Russia had agreed to slash its production by 300,000 barrels a day by the end of the agreement period. Russian news agency, Tass, earlier this week reported that the country slashed its oil production by 161,000 barrels a day as of March 19 compared with the October 2016 level, the baseline used by the participants of the output cut deal.
But several of the country's biggest firms, including state-controlled oil giant PAO Rosneft, have announced plans to step up their production during the year, analysts note.
Alongside the U.S. EIA data, investors are also waiting for China's February oil figures due Thursday.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 0.67% to $1.59 a gallon. ICE gasoil changed hands at $446.75 a metric ton, down $6.50 from the previous settlement.
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