Global oil prices turned lower Thursday, after posting their sharpest fall since early March overnight on an unexpected build in U.S. crude inventories last week.
Brent crude, the global oil benchmark, fell 0.8% to $47.69 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.9% at $45.33 a barrel.
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Oil prices sank on Wednesday after the Energy Information Administration said U.S. crude stocks rose 3.3 million barrels last week, deepening concerns that the continuing production cuts by the Organization of the Petroleum Exporting Countries and Russia aren't effectively reducing the glut of oil that has suppressed prices for over two years.
"There is some general doubt regarding the success of OPEC," said Olivier Jakob at Switzerland-based consultancy Petromatrix. Mr. Jakob said that this is usually the tightest time of year in terms of strong demand, along with lower supply from Saudi Arabia due to seasonal factors, therefore U.S. stocks weren't expected to build.
Analysts say the cuts have created a floor for oil prices, which has benefited U.S. shale producers, who are aggressively expanding their operations and raising their oil exports. Though last week's daily crude production ebbed from the previous week, when it reached the highest level since August 2015, it remained above 9.3 million barrels.
"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 buildup in 2018.
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(END) Dow Jones Newswires
June 08, 2017 09:26 ET (13:26 GMT)