Oil prices fell again on Thursday, with a sell-off continuing the day after data showed a surprise surge in U.S. crude inventories, and Brent settled at its lowest since Nov. 29, the eve of an OPEC production cut deal.
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"The market is catching its breath after the inventory report which, as far as the oil market was concerned, stunk," said Andrew Lipow, president of Lipow Oil Associates in Houston.
"The market continues to be impatient with the OPEC and non OPEC cuts and is looking for more data world wide that inventories are indeed falling."
Oil prices have slipped below $50 a barrel despite a pledge by the world's largest exporters, led by the Organization of Petroleum Exporting Countries, to extend a cut in production of 1.8 million barrels per day (bpd) into next year.
OPEC agreed to output cuts in November, and shortly after that Russia and other non-OPEC producers also agreed to cut production in an effort to reduce a global glut that has forced prices into a steep and long-lasting slump.
Last month the countries agreed to extend the cuts, yet global supplies of crude remain strong, especially in the United States where booming shale production has the country on track to rival Saudi Arabia and Russia in crude output.
On Wednesday, prices fell 5 percent after data showed U.S. inventories of crude oil and gasoline surprisingly rose last week. [EIA/S]
U.S. crude production fell to 9.318 million barrels per day, the first drop in four weeks, according to data on Wednesday from the Energy Information Administration.
But Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, said that for the oil market, the high U.S. inventory figures "overshadowed any moderation in production."
Adding to concerns about the swelling global supplies, Royal Dutch Shell
Nigeria, along with Libya, is exempt from the production cut made by the OPEC and its 11 partners.
"Unless data are released that make the latest inventory build appear an anomaly, oil prices are hardly likely to make any lasting recovery," Commerzbank said in a note.
(Additional reporting by Amanda Cooper in London, Aaron Sheldrick in Tokyo; Editing by Chris Reese and David Gregorio)