Oil prices were mixed on Thursday, with Brent crude down on concerns that key producers were still adding to the global crude glut but US crude up slightly after a larger-than-expected domestic inventory drawdown.
After shedding almost 3% overnight, USA crude futures on the New York Mercantile CLN7, +1.37% were recently up 45 cents, or 0.9%, to $48.78 a barrel in the Globex electronics session.
Oil slid below $50 a barrel last week after the agreement by the Organization of Petroleum Exporting Countries and its allies to prolong output curbs for nine months disappointed some investors hoping for more. "A scenario that would not be favorable to oil prices".
Brent oil tumbled below $50 on Friday, heading for a second straight week of losses, on worries that U.S. President Donald Trump's decision to abandon a climate pact could spark more crude drilling in the United States, worsening a global glut.
Brent crude futures for August were up 63 cents, or 1.2%, at $51.39 a barrel during noon hour ET, after earlier rising to $51.44.
On its part, the US West Texas Intermediate crude futures fell 84 cents to $47.54 per barrel, figures from Reuters show.
US gasoline demand over the past four weeks was 0.7% lower year-on-year at 9.6 million bbl/d.
President Donald Trump has vowed to provide extra support for US oil production and is widely expected to pull the United States out of a landmark global climate accord. If the selling subsides inside this zone then we may see prices stabilize or even a late-session short-covering rally.
Crude oil prices have been dampened by rising USA output despite Opec production cuts.
As OPEC and other major producers cap their production, analysts see US crude output continuing to trend higher as long as global prices stay above $40, a threshold at which many large USA oil companies can produce at a profit.
Faced with a lingering glut, OPEC last week discussed reducing output by a further 1 to 1.5 percent, and could revisit the proposal should inventories remain high, sources told Reuters.
OPEC and Russian Federation agreed to extend production cuts another nine months in an effort to keep prices above $50 a barrel.
Apart from booming shale output, supply recovery in Nigeria and Libya, the two OPEC members exempt from the deal to cut output, pose additional risks for crude markets, analysts said.
Analysts said the group is at risk of losing further market share to USA shale oil producers, which could cause compliance with the deal to slip in the second half of the year.