Global oil prices recovered slightly in Asian trade Thursday, after posting the sharpest fall since early March overnight on an unexpected build up in U.S. crude inventories last week.
The 3.3-million barrel rise in U.S. crude stocks deepened concerns that the ongoing production cuts by the Organization of the Petroleum Exporting Countries and Russia aren't effectively reducing the glut of oil that has suppressed oil prices for over two years.
Analysts say the price benefits of the cuts have largely flowed to U.S. shale producers, which are aggressively expanding their operations and raising their oil exports. Although last week's daily crude production ebbed from the previous week, it remained above the 9.3 million barrels level.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $45.95 a barrel at 0143 GMT, up $0.23 in the Globex electronic session. August Brent crude on London's ICE Futures exchange rose $0.27 to $48.33 a barrel.
"Oil prices are likely to remain range bound with OPEC providing support for prices and U.S. production growth limiting potential price gains," said Rob Haworth, investment strategist at U.S. Bank Wealth Management.
According to a Wall Street Journal analysis of data from the U.S. Energy Department and the International Trade Commission, the U.S. exported 1 million barrels of oil a day during some months so far this year, double the pace of 2016.
The U.S. Department of Energy noted that continuing production from non-OPEC countries will slow down the pace of global oil inventory reduction in 2017 and lead to a small inventory build-up in 2018.
Meanwhile, a major worry in the market is that the gusher of U.S. oil will discourage OPEC members from sticking to the production caps.
"For the OPEC-led deal to succeed, we need to see a greater export focus and greater compliance amongst accord members," said Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia.
Oil investors will be closely watching China's May crude import and refined product export data due later Thursday. In April, China's crude buying eased from a record high the previous month but still registered a 5.5% on-year rise. China's slowing appetite for fuel has turned the country into a product exporter in recent months.
Nymex reformulated gasoline blendstock for July114 0.8% to $1.5027 a gallon, while July diesel traded at $1.4278, 0.8% higher.
ICE gasoil for June was last at $422.25 a metric tons, up 0.8% from the previous settlement.
--Lynn Cook contributed to the article.
Write to Jenny W. Hsu at firstname.lastname@example.org
(END) Dow Jones Newswires
June 07, 2017 22:31 ET (02:31 GMT)