Oil prices fell on Thursday, weighed down by oversupply, but losses were limited by expectations that major exporters would agree to extend production cuts to try to rebalance the market.
Benchmark Brent crude was down 57 cents, or 1.1 percent, at $51.25 a barrel by 7:30 a.m ET (1130 GMT), about 9 percent below this month’s peak.
U.S. light crude was down 54 cents, or 1.1 percent, at $49.08.
Traders reported ample supplies in all key markets despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to cut output by 1.8 million barrels per day (bpd) in the first half of the year to tighten the market and prop up prices.
OPEC is discussing extending its cuts into the second half of the year, but the group has an uphill task as oil inventories are near record levels in many parts of the world.
U.S. gasoline prices were down nearly 2 percent on Thursday and have fallen more than 8 percent this month.
“U.S. commercial stocks increased by more than 6.5 million barrels last week,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates.
“Stock rebalancing has been put on hold as U.S. commercial oil inventories have jumped.”
U.S. crude oil production is also rising, up 10 percent since mid-2016 at 9.27 million bpd.
“We see a risk for a weaker oil price towards the end of the year … because shale is delivering so much oil,” Jarand Rystad told Reuters.
Still, with an expectation that OPEC will extend its production cuts to cover all of 2017, analysts said there was support for prices around current levels.
“Brent oil looks neutral in a range of $51.30 to $52.32,” said Reuters technical commodities analyst Wang Tao.