OPEC has proposed cutting output by 1.5%.
Oil prices pared early gains on Thursday despite U.S. industry data showing a big drop in crude stocks last week, with investors skeptical that OPEC-led cuts will be enough to rebalance an oversupplied market.
Brent crude oil eased by 3 cents to $50.73 a barrel by 1327 GMT, while U.S. light crude gained 14 cents to $48.46. The two contracts hit session highs of $51.44 and $49.07 respectively.
The contracts fell about 3% to three-week lows on Wednesday after news that an increase in Libyan oil production had helped to boost OPEC crude output in May, representing the first monthly rise this year.
“Sentiment is very poor and yesterday’s survey from Reuters regarding OPEC production in May added to the skepticism about OPEC’s capability to rebalance the market as quickly as hoped for,” Commerzbank commodities analyst Carsten Fritsch told the Reuters Global Oil Forum.
Industry data on U.S. oil inventories from the American Petroleum Institute (API) late on Wednesday had given prices an initial lift on Thursday morning.
API figures showed that U.S. crude inventories fell by 8.7 million barrels to 513.2 million in the week to May 26, compared with analyst expectations for a decrease of only 2.5 million barrels.
“This was well ahead of forecasts,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates. “(It) is helping the oil market regain some ground this morning.”
The U.S. Energy Information Administration (EIA) reports its official figures for U.S. stockpiles at 1500 GMT on Thursday.
The U.S. inventories data provided some relief after a week of negative news on the global supply-demand balance.
The Organization of the Petroleum Exporting Countries and other producers including Russia are trying to restrict output to drain stockpiles that are close to record highs in many parts of the world.
OPEC last week discussed cutting its oil output by a further 1-1.5%, and could revisit the proposal should inventories remain high and continue to weigh on prices, sources said.
However, U.S. crude production is rising fast as new technology helps to extract shale oil, making the United States more self-sufficient in energy.
President Donald Trump has vowed to provide extra support for U.S. oil production and is widely expected to pull the United States out of a landmark global climate accord.
Phillip Futures’ investment analyst Jonathan Chanes said a U.S. withdrawal would signal Trump’s intention to further roll back emission regulations.
“That would favor the use and demand of fossil fuels,” Chanes said.