Oil prices were down slightly on Tuesday, but hovered just above their lowest level this month amid continued doubts that the global crude glut is being drained.
Crude is down around 5% on the week. That reflects recent investor concern about the strength of rebounding U.S. oil production and ebbing faith that the Organization of the Petroleum Exporting Countries can effectively lead the market back into balance after several years of oversupply.
Brent crude, the global oil benchmark, was down 0.1% to $51.51 a barrel on London's ICE Futures exchange, having dipped to $51.42 on Monday, their lowest level this month. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.4% at $49.04 a barrel.
"The market is really focusing on visible inventory draws, they're just not getting it in the right places," said Miswin Mahesh, oil analyst at consultancy Energy Aspects.
Mr. Mahesh said that although stocks of refined products were falling, investors wanted to see crude stocks fall.
"Volumes released from storage, while hard to quantify, are large enough to be of significance for the wider market and will act as a buffer which will need to be cleared before the underlying tightening in supply-demand balances can become the market driver again," consultancy JBC Energy said in a note.
OPEC and other major producers agreed to cut production by 1.8 million barrels a day in the first half of 2017, but because stocks have remained high the cartel is now expected to extend the deal when it meets in May.
"Until OPEC announces an official decision on whether to extend the production cuts, the main focus of the market will be on that," said Nelson Wang, an energy analyst at CLSA.
Analysts believe that failure by OPEC and major producers such as Russia to deliver an extension could result in a steep price decline.
Analysts say the recent downtrend may persist as U.S. oilfield-service companies, namely drillers, still have plenty of spare capacity.
Mr. Wang estimates only around 70% of available oil rigs in the U.S. are currently in operation despite persistent growth this year in drilling activity there. Baker Hughes' closely watched rig count is at its highest level in nearly two years.
"This means there is a lot of upside risk to U.S. supplies," he said.
Nymex reformulated gasoline blendstock -- the benchmark gasoline contract -- fell 0.7% to $1.61 a gallon. ICE gasoil changed hands at $465.75 a metric ton, unchanged from the previous settlement.
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(END) Dow Jones Newswires
April 25, 2017 09:07 ET (13:07 GMT)