Oil prices turned lower Wednesday as investors shook off U.S. data showing that stockpiles continued to shrink and focused on relentlessly rising production amid doubts that the global oil glut is going away.
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Prices popped higher after the U.S. Energy Information Administration reported that stockpiles of crude oil and gasoline had fallen more than expected.
But that news wasn't enough for a sustained rally.
U.S. crude futures recently traded down 35 cents, or 0.8%, at $43.16 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, was down 44 cents, or 0.96%, at $45.58 on ICE Futures Europe.
Oil prices slid into bear market territory Tuesday, settling at their lowest level since September. A bear market is typically defined as a decline of 20% or more from a recent peak.
The further decline Wednesday had some analysts wondering what it could take to shake crude prices higher.
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"The majority view was if we had draws in crude and gasoline, we would have some kind of rally," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. "It looks to me that folks took that opportunity to be sellers of the rally."
Crude oil stockpiles fell by 2.5 million barrels to 509.1 million barrels in the week ended June 16, according to the EIA. Analysts surveyed by The Wall Street Journal were expecting a two-million-barrel drawdown.
Gasoline stockpiles also fell more than anticipated -- dropping by 578,000 barrels, compared with the 100,000 barrel decline that analysts had been anticipating.
The declines should have been welcome news for investors who have been anxiously awaiting indications that bloated U.S. oil supplies are shrinking and that production cuts implemented by the Organization of the Petroleum Exporting Countries and other major producers this year are working.
But U.S. producers have rushed in to fill the void left by OPEC. U.S. oil output is at a 22-month high and inched higher yet again last week, rising by 20,000 barrels a day, according to the EIA.
And some analysts say investors are suffering from OPEC fatigue and are no longer responding to positive market signals.
"OPEC's current policy has failed, in part due to member states destocking millions of barrels of crude from their own storage, at the same time as cutting production and reassuring the market that the rebalancing was on the way because output was down," analysts from Energy Aspects said in a note. "The fecklessness of this policy has destroyed the group's credibility, forcing bullish players out of the market."
Rising production from OPEC members such as Nigeria and Libya that were exempt from the cut are undermining the idea that the cartel can lift prices.
Gasoline futures fell 0.2 cent, or 0.15%, to $1.4218 a gallon. Diesel futures fell 1.39 cents, or 1%, to $1.3810 a gallon.
Dan Molinski contributed to this article.
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(END) Dow Jones Newswires
June 21, 2017 12:54 ET (16:54 GMT)