Oil prices wavered between small losses and gains Thursday, buffeted by continued concerns about growing USA crude production that were offset by signals that other major producers remain in favor of extending their output-cut agreement into the second half of the year.
Oil prices fell to a two-week low amid concerns that the global supply is far too high, and if the downward trend isn't bucked crude could decline for the third day in a row. However, that level was still near a record high.
At a press conference in the United Arab Emirates, Saudi Energy Minister Khalid al-Falih said that "there is consensus building but it's not done yet".
U.S. West Texas Intermediate (WTI) crude futures had risen 31 cents, or 0.61 percent, to $50.75 a barrel. Brent, the global benchmark, gained 26 cents, or 0.5%, to $53.19 a barrel on ICE Futures Europe.
Iran pumped just shy of its 3.8 million barrels a day allowed under the deal in the first quarter, according to the International Energy Agency.
"The rebalancing in USA crude stocks may have got under way, but concerns about further gasoline builds are rife even as the US summer driving season shifts up a gear", said Stephen Brennock, an analyst with PVM Oil Associates.
"The U.S. market perhaps doesn't believe in the oil market balance that OPEC would have us believe", said Hans van Cleef, senior energy economist with ABN AMRO.
"The market sentiment appears to be that the increase in USA shale production outweighs the OPEC action and the market is keeping the loss we had yesterday", he said. USA crude inventories were at 532.3 million barrels, only about 3 million barrels less than the record reached in March.
OPEC members Saudi Arabia and Kuwait signaled that the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, would likely extend their oil output cut beyond June. US inventories of 532 million barrels remained near all-time records reached in March.
"Saudi's done a good job of managing the rhetoric", said Michael Hiley, a trader at LPS Futures LLC.
"Barring a spike in geopolitical tensions.oil prices will simply not be able to materially rally through resistance in the mid $50s (WTI) until the pace of of USA production moderates", said Tyler Richey, co-editor of the Sevens Report.