Oil prices rebounded slightly on Thursday from Wednesday's deep sell-off, in part because of a slowdown in US production, after an unexpected surge in US inventories and the return of more Nigerian crude caused the market to fall to one-month lows. US 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.
Brent crude was up 6 cents to $48.12 a barrel by 12:36 pm EDT (1636 GMT), having touched an earlier low of $47.56, while US crude futures were up 13 cents at $45.86 a barrel. On Wednesday, prices fell five percent after data showed US inventories of crude oil and gasoline surprisingly rose last week as refinery runs declined and exports fell.
"The inventory data was surprising to everyone, both in crude and in refined products," said Rob Haworth, senior investment strategist at US Bank Wealth Management.
Oil prices have slipped below $50 a barrel despite a pledge by the world's largest exporters to extend an existing cut in production of 1.8 million barrels per day (bpd) into next year in an effort to reduce bulging global inventories. Adding to concerns about supply outstripping demand, Royal Dutch Shell on Wednesday lifted a force majeure on exports of Nigeria's Forcados crude, bringing all the country's crude grades fully online for the first time in 16 months.
The market has also come under pressure from news of rising output from Libya, which together with Nigeria is exempt from the production cut made by the Organization of the Petroleum Exporting Countries and its 11 partners. "I've been quite bullish for the second half of this year, based on supply and demand balances and I would still not give up on that idea, that rebalancing is going to start in the second half," PVM Oil Associates strategist Tamas Varga said.
"But if Nigerian and Libyan production is picking up as well as they are now, then slowly, I am probably going to have to start changing my mind." "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. On Thursday the Former F.B.I. director James B. Comey delivered senate testimony about the US President and an investigation into Russian interference with the US election. Haworth said the hearing was distracting US players from the market. "Today the prices are more quiet and a lot of people are focused on a lot of other things that probably won't drive these prices," said Haworth. Thursday's trading volumes for WTI were down about 84 percent from the same time on Wednesday.