Oil prices fall below $56 amid reports of rise in United States stocks

United States futures dipped under $US49 a barrel for a while overnight Thursday before recovering to end around $US49.25 a barrel, down more than 2% on the day.

U.S. benchmark West Texas Intermediate for April delivery, slid $1 to $49.28 a barrel, its first close under $50 since December 7.

Birol, who met Pradhan on the sidelines of the CERAWeek which kicked off yesterday, told reporters that the leadership of Prime Minister Narendra Modi has provided a strong impetus to Indian economy, particularly in terms of boosting oil and gas production.

Oil prices climbed on March 9 due to a strong compliance with touted worldwide production cuts, although a surge in USA crude inventories continued to drag.

Kuwait’s oil minister said on March 8 that OPEC’s compliance with the cuts had exceeded targets, standing at 140 percent in February, while non-OPEC members’ compliance was 50-60 percent.

That’s great news for laid-off oil workers and American drivers anxious about gasoline prices.

Mr Al Mazrouei said in Houston that a decision on extension will depend on three factors: whether oil in storage drops significantly; whether there has been a sustained oil price rise; and the effect on U.S. shale oil production.

“The discussion will now center around whether or not Saudi Arabia is willing to give back market share to USA producers. or are they ready for yet another round of the market share war”, Dominick Chirichella, senior partner at the Energy Management Institute in NY, told Reuters on Thursday.

Officially, OPEC maintains that it is too early to talk of extending the agreement, a position reiterated by the Saudi minister on Tuesday. Energy ministers and senior oil executives are meeting this week at CERAWeek in Houston, the biggest USA gathering of the oil industry. Russian Federation also promised to implement its 300,000-barrels-per-day share of production cuts by the end of April.

Concerns over rising U. shale oil output have been offsetting the impact of production cuts agreed by the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC members to curb a global crude oversupply.

“This is a big market”, Falih said, pointing to demand growth which could absorb the expected increase in USA production.

The rush of Saudi oil “may have folks questioning the efficacy of their production cuts”, Anthony Starkey, manager of energy analysis at Platts Analytics, wrote in a report. But the challenges to balance the oversupply keeps ongoing with fresh estimates that the USA oil production will rise by 330,000 barrels per day (BPD) in 2017 to 9.21 MMBPD.

At the end of the day, OPEC may have to choose between giving rival higher-cost producers a reason to pump more, or cutting back its supply (and some market share) for the sake of higher prices and market balance.

According to Reuters, the U.S. interest rate may increase next week, another deterrent for oil prices. Many investors are closely watching for cuts to global oil output to show up and influence the data on USA stockpiles the government releases every week.