Brent crude was 9 cents lower at $51.72 a barrel by 12:51 p.m. EDT (1651 GMT), recovering from Tuesday's drop to $50.25, its lowest since November 30 when OPEC announced its supply accord.
The price of a barrel of Brent crude, the benchmark global contract, rose by 1 per cent to $51.55 a barrel.
Market analysts said that the rise in crude oil futures was largely in tune with a firm trend overseas after government data confirmed a drop in U.S. oil inventories.
A bigger worry is the fact that Russian Federation also hasn't cut output as per the agreed terms with February production unchanged from January at 11.1 mbpd. Its members need higher oil prices to balance government budgets, but cutting back production to prop up prices means losing market share as other suppliers step in to fill the gap.
In 2016, the first full year with no restrictions on exports of domestically-produced crude oil, USA crude oil exports averaged 520,000 bpd, 55,000 bpd (12%) higher than in 2015 (Figure 2).
The signs of physical oversupply abound from Europe to West Africa to the U.S. Provisionally, we estimate that the non-Opec countries have cut production by 37 per cent of their commitment in the first two months of the year.
Oil prices on Wednesday climbed for the first time in more than a week on a surprise drawdown in U.S. crude inventories and data from the International Energy Agency (IEA) suggesting OPEC cuts should create a crude deficit in the first half of 2017.Data from the U.S. Energy Information Administration (EIA) showed U.S. crude stocks fell last week, the first weekly decline after nine consecutive increases.
Distillate: Distillate fuel supplies (including diesel and heating oil) went down by 4.23 million barrels last week, again significantly trumping analysts' expectations for a 1.8 million-barrels fall. EIA forecasts show that United States shale oil production is expected to rise again in April by 109,000 bpd to 4.96 million bpd suggesting that shale is surely making a comeback at this level of oil prices.
"Market focus remains centered on escalating US production growth and elevated domestic inventory levels, but this is not representative of the rest of the world". Instead of rebounding to $53 a barrel, US crude has remained stuck around $49. At 528.16 million barrels, current crude supplies are up 7% from the year-ago period and are above the upper limit of the average range during this time of the year. I don't think it is going to be enough to bring some follow-through buying to crude oil.
"Inventories are still a concern, but the EIA report signalled that stockpiles are not quite as big a concern as previously thought", said Stewart Glickman, head of energy research at CFRA Research in NY.