Crude futures pulled back on Thursday as investors focused on U.S. inventories falling less than expected, deepening skepticism that production cuts from the Organization of the Petroleum Exporting Countries aren't making a big dent in elevated global stockpiles.
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Brent crude, the global oil benchmark, fell 0.6% to $50.48 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.7% at $47.49 a barrel.
Government data showed a modest decline for U.S. crude inventories and another unexpected increase in gasoline supplies as hopes about summer gas demand are frail. Over the last four weeks, sales fell 2.7% from a year earlier.
"It was somewhat disturbing that gasoline inventories went up yet another week, counter seasonally, and of course we saw continued increasing U.S. crude oil production," said Bjarne Schieldrop, chief commodities analyst at SEB Markets.
Meanwhile, U.S. crude exports continue to soar, aggravating the market's supply-and-demand imbalance. S&P Global Platts said U.S. oil has become more price-competitive, with West Texas Intermediate offered at a discount to Dubai crude, the main benchmark for Middle East supply to Asia. Exports in the past month were 38% above outbound shipments in the last eight weeks of 2016, the firm's data show.
"The market is looking for overall stock draws as evidence that the OPEC cuts are indeed driving global rebalancing," said Société Générale. "This week's U.S. figures did not provide that evidence."
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As U.S. producers continue to unleash a steady, and strong, stream of shale oil into the market, it intensifies pressures on OPEC and Russia to continue keeping their output capped to prevent further price erosion. An official decision whether or not to extend curtailments will be announced when the group meets later this month.
"If OPEC comes out with a negative message and no cooperation the market might trade down to $45," Mr. Schieldrop said, adding that the expectation was that OPEC would take action to reassure investors that they aren't going to flood the market with oil.
Oil's decline was in step with other commodities including industrial metals such as copper, which has been hit by concerns over Chinese demand.
Earlier this week disappointing Chinese manufacturing data raised doubts that the anticipated commodity demand for infrastructure and construction projects may not materialize on the scale that had been expected.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 0.4% to $1.52 a gallon. ICE gas oil changed hands at $442.00 a metric ton, up 25 cents from the previous settlement.
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(END) Dow Jones Newswires
May 04, 2017 06:39 ET (10:39 GMT)