WTI (oil futures on NYMEX) finally cracked the key resistance-turned-support at 64.00, as the sellers remain in command so far this Thursday, as the sentiment remains weighed down by mounting concerns over the economic slowdown and surging USA crude supplies.
IEA said Thursday that worldwide crude inventories are set to decline for the rest of the year as OPEC output falls.
That is down 9.4 percent from 10.23 million bpd in February as state-owned refiners began maintenance.
The rig count fell for the past four months as independent exploration and production companies cut spending on new drilling to focus on earnings growth instead of increased output.
"Although it is still early days, the major centers of oil demand growth are performing strongly; in China, the economy seems to be reacting to the government's stimulus measures", it said, also reporting strong demand in India. Macroeconomic uncertainties can take their toll on oil demand, the IEA said. Demand is expected to grow by 1.4 percent per day.
There is worldwide shortage in the oil market due to the interventions in production by the oil cartel OPEC.
It said that US, Brazil, Russia, UK, Australia, Ghana, Sudan and South Sudan will be the main drivers of supply growth this year.
OPEC, Russia and other non-member producers are reducing output by 1.2 million bpd from January 1 for six months.
Oil prices doubled on three occasions thanks to the cuts led by OPEC countries, U.S. sanctions on Iran and Venezuela and the renewal of fighting in Libya.
The International Energy Agency said on Thursday that Venezuelan crude production has dropped below 1 million bpd to 870,000 bpd due to US sanctions, and Iranian supply could fall further after May if Washington tightens its sanctions against Tehran, as many experts anticipate.
Nigerian production increased by 11,000 bpd in March to 1.733 million bpd and fell by 5.000 bpd to 1.685 million bpd according to direct communication, according to the monthly oil market report for April. It's not until the WTI Crude Oil market breaks out to the upside that this market will be able to go higher as well.
Adding to the impact of the involuntary declines, top exporter Saudi Arabia has cut production by more than it agreed under the global pact. Though the rig count itself is a lagging indicator, with additional production showing up with a five-to-six-week latency after new drilling is reported, it is an important gauge to market participants trying to determine if USA output is surging again.