Oil futures rose on Thursday after slumping to a three-week low in the previous session, buoyed by a report from an industry body that showed USA crude stockpiles had fallen more than expected.
Even though the Organization of the Petroleum Exporting Countries and major non-cartel heavyweights such as Russian Federation last week extended the ongoing production cuts, it remains to be seen if such caps can effectively chip away the glut of oil that has haunted prices for more than two years.
A flawless storm of geopolitical and market issues put the $50 per barrel floor for crude oil prices under threat early in the Wednesday session. "U.S. crude oil exports were a strong contributor to the crude oil stock draw".
"As these numbers are getting confirmed, the initial optimism about OPEC's temporary cuts, may turn to increasing skepticism about OPEC's choice of policy once the current output deal expires next year", Tonhaugen said.
Industry data on US oil inventories from the American Petroleum Institute (API) late on Wednesday had given prices an initial lift on Thursday morning.
USA crude futures extended gains after the data and was 1.4 percent, or 68 cents, higher at $49 a barrel, as of 11:33 a.m. EDT (1533 GMT). Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation's biggest oil-storage hub, fell for a second week to 64.8 million barrels.
Nigeria and Libya had earlier been exempted from an OPEC and non-OPEC producing members' agreement to extend the crude oil production cut by another nine months to allow further rebalancing of the market.
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Futures slumped as much as 1.8 percent in NY while Brent crude in London slid below $50 a barrel.
"In terms of heavy crude, we have heavily relied on Middle East because it's been the most economical crude and we buy all types of crude oil from Russia, Africa, Europe and USA, if they become economical", Song said.
On oil price decline, the OPEC scribe said that the cartel has no issues with people taking position, adding that the producers' group has chose to focus on the fundamentals.
"Attention will be on US inventory stocks tomorrow, with expectations of a further draw this week, following initial indications of strong demand for gasoline after the AAA said that driving mileage over the holiday weekend was the highest since 2005", said analysts at Cenkos Securities.
In fact, Saudi Arabia's oil minister said that he sees global supply reaching the five-year average by the end of the year.
On Friday, demand for bearish puts expiring in March 2018 spiked, indicating traders and investors are already protecting against a more aggressive drop in price once OPEC's joint supply deal expires.
Late Tuesday, the American Petroleum Institute said crude oil inventories in the United States, the world's leading economy, declined by more than 8.6 million barrels, far more than the 3.2 million barrel draw forecast by S&P Global Platts earlier this week.
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