Oil prices edged down on Tuesday, as a recovery in Libyan output and rising U.S. supplies raised worries that OPEC-led production cuts may not significantly tighten a bloated market.
Oil has been weighed down by the market’s impatience with the slow pace of inventory drawdown globally, even after major oil producers agreed to cut production by 1.8 million barrels per day for the first half of 2017.
U.S. crude inventories, for example, are expected to mark a fourth straight week of declines from a record high hit at the end of March, but stocks are still seen about 10% above year-end levels.
London Brent crude for July delivery was down 6 cents, or 0.1%, at $51.46 by 0227 GMT, after settling down 53 cents on Monday. Brent crude has risen only around $1 from a one-month low of $50.45 hit on Thursday that came after the restart of two key Libyan oilfields.
NYMEX crude for June delivery was down 9 cents, or 0.2%, at $48.75.
The Organization of the Petroleum Exporting Countries and participating non-OPEC countries meet on May 25 to discuss whether to extend the coordinated curbs in production into the second half of the year.
“Excess supplies are noticeable, particularly in Europe, which is curbing Brent’s gains,” said Kaname Gokon at brokerage Okato Shoji in Tokyo. “Overall, the demand is weakening and the inventories pile up.”
Weighing on oil, Libya’s National Oil Company said production has risen above 760,000 bpd to its highest since December 2014, with plans to keep boosting production.
Crude output in the United States is at its highest since August 2015.
The market got little support after a private survey showed on Tuesday that China’s factory sector lost momentum in April, with growth slowing to its weakest pace in seven months.
U.S. Interior Secretary Ryan Zinke on Monday signed an order directing the government to issue a new five-year plan for development on the U.S. Outer Continental Shelf to implement President Donald Trump’s directive to review drilling bans in parts of the Atlantic, Arctic and Pacific Oceans.
U.S. crude inventories likely fell for a fourth straight week, while refined product stockpiles were seen up last week, a preliminary Reuters poll showed.
Industry group, the American Petroleum Institute (API), is scheduled to release inventory data for the week to April 28 at 4:30 p.m. EDT (2030 GMT) on Tuesday.