02 June, 2017
"This is a rangebound market until you get something breaking out that tells you a longer term story", said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
The main price factor for Brent is whether a decision led by the Organization of the Petroleum Exporting Countries (OPEC) to extend a pledge to cut production by around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018 will have the desired effect of significantly tightening the market to end years of oversupply.
Brent crude futures, the global benchmark for oil prices, were at $51.66 per barrel at 0356 GMT, down 18 cents, or 0.4 percent, from their last close.
Rising output from the United States and Libya undermines efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russian Federation to tighten an oversupplied market by cutting production by around 1.8 million bpd until the end of the first quarter of 2018.
Still, prices tumbled after the OPEC deal was announced. The cutbacks have yet to drain crude inventories significantly.
Libya's rising production adds to a rise in USA output, which largely thanks to shale oil drilling has jumped by more than 10 percent since the middle of previous year to over 9.3 million bpd C-OUT-T-EIA, close to top producers Saudi Arabia and Russian Federation.
OPEC has agreed with Russian Federation to limit output for nine more months, but Nigeria and Libya are exempt from the deal and are said to be ramping up.
Oil prices fell on Tuesday, pressured by concerns that production cuts by the world's big exporters may not be enough to drain a global glut that has depressed the market for nearly three years.
USA drillers have added rigs for 19 straight weeks to reach 722, the highest since April 2015, according to services firm Baker Hughes (BHI.N).
A run by USA oil prices toward $50 a barrel ran out of steam on Tuesday as persistent concerns of oversupply outweighed signs of a strong start to the American summer driving season.
"While we are bullish on near-term prices as inventories normalize".
But rising production from the United States has so far undermined its efforts to reduce bloated global inventories to the five-year average.
The American summer driving season, which by tradition started on the Memorial Day holiday on Monday, may offer some support for prices, analysts said.
The American Automobile Association (AAA) said ahead of Memorial Day that it expected 39.3 million Americans to travel 50 miles (80 km) or more away from home over the Memorial Day weekend.
He said that thanks to increasing efficiency, USA shale oil producers would likely deliver an additional 1.5 million barrels of crude a day to the market in 2018.
