Oil prices declined on Thursday, as enthusiasm over a deal by major oil producers to limit output dwindled.
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Light, sweet crude for July delivery lost $1.03, or 2%, to $50.33 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 91 cents, or 1.7%, to $53.05.
The Organization of the Petroleum Exporting Countries extended a deal to cap production into March 2018 on Thursday, The Wall Street Journal reported, continuing an attempt to mitigate a global supply glut and support oil prices.
Thursday's agreement will extend by nine months a deal made at the end of last year to cut oil production. The news confirmed expectations from analysts and traders, but failed to offer further reasons for optimism.
"The nine months [extension] was already well factored into the market," said Kyle Cooper, a consultant for Ion Energy Group in Houston, who added that some participants were hoping that the amount of production cut would also rise.
Confidence that the cartel would continue production cuts pushed oil prices to the highest level in over a month this week. However, some analysts and investors have begun to doubt the effectiveness of the OPEC cuts, as other countries such as the U.S. and Canada have ramped up their own production in response to higher prices.
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"The problem was that OPEC had come up with a statement saying they'd do 'anything it takes,' so people were expecting just a little bit more from the meeting," said Nitesh Shah, commodities strategist at ETF Securities, who believes crude is unlikely to go much above $55 this year.
Data from the U.S. Energy Information Administration also put some pressure on oil prices this week, after a smaller-than-expected drop in gasoline renewed concerns over slowing demand for oil products ahead of summer driving season.
Oil futures are likely to remain volatile through Thursday, with non-OPEC producers, including Russia, slated to meet with the cartel to decide on their own output levels later in the day.
"There's been very little success in the global picture," said Donald Morton, senior vice president at Herbert J. Sims & Co., who runs an energy-trading desk. Still, "it has the potential to develop into a very significant price stability...if in fact the glut does disappear."
Gasoline futures fell 0.6%, to $1.6430 a gallon, and diesel futures fell 0.9%, to $1.5912 a gallon.
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(END) Dow Jones Newswires
May 25, 2017 11:58 ET (15:58 GMT)