Oil prices inched up on Tuesday but markets remain under pressure following six consecutive sessions of declines as traders lose confidence that pledged output cuts by major producers will rein in oversupply in a world awash with fuel.
U.S. West Texas Intermediate (WTI) crude futures added 24 cents, or 0.5 percent, by 0305 GMT (11:05 p.m. ET), but remained below the $50 mark pierced late last week, at $49.47 a barrel.
Brent crude rose 26 cents, or 0.5 percent, to $51.86 per barrel.
Traders said the gains were a counter-reaction to consecutive price drops in the previous six sessions.
Despite Tuesdays increases, market sentiment has turned bearish, with Brent down 10 percent since late 2016 despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to cut output by 1.8 million barrels per day (bpd) in the first half of 2017 in order to tighten the market.
Given that oil supplies remain at record highs despite the cuts, Stephen Schork of the Schork report said on Tuesday that "OPEC has failed miserably in its endeavor to balance the oil market".
JPMorgan said in its latest weekly market note to clients that "it is evident that... crude markets are still struggling to clear (oversupply)."
The bank said that it was closing its "August Brent long position at a loss."
Indicating its cautious outlook, JPMorgan said that "crude markets are close to floating storage economics and (this) is a bearish sign for output price developments."
Floating storage is a clear indicator of oversupplied markets. It is pursued when oil for immediate delivery is so much cheaper than that for future dispatch that it becomes profitable for traders to charter tankers to store it for later.
JPMorgan said that in order to reduce the ongoing supply overhang, OPEC "will be forced to renew, and possibly deepen the agreement if they wish to keep prices much above $50 per barrel."
Russia said on Monday that its oil output could climb to the highest rate in 30 years if OPEC and non-OPEC producers do not extend a supply reduction deal beyond June 30.
Thomson Reuters Eikon data shows that Russian oil shipments, which exclude its pipeline exports, have already reached record highs of 5 million bpd in April, up 17 percent since December, before the cuts were officially implemented.
While producers may hurt under the renewed slack in crude markets, consumers like refiners benefit as their production margins making fuels such as gasoline improve .
(Reporting by Henning Gloystein; Editing by Richard Pullin and Sherry Jacob-Phillips)