Oil prices erased gains made earlier in the day as US stockpiles fell less than analysts expected and demand for gasoline weakened.
At the time of publishing, Brent futures were trading 0.04 per cent higher at $50.48 a barrel while West Texas Intermediate (WTI) oil prices were 0.21 per cent at $47.56 a barrel.
The US Energy Information Administration (EIA) revealed weekly crude stocks fell by 930,000 barrels to 527.8m, which was less than half of the 2.3m barrel decline forecasted.
"US domestic production rose again, and continues its steady climb," said John Kilduff, partner at energy hedge fund Again Capital, noting a sharp decline in imports turned what would have been an increase in stocks into a small drawdown.
EIA data also showed gasoline stocks, which have lately been driving prices rose by 191,000 barrels, less than the 11.3m barrel gain analysts expected. However, gasoline demand fell 2.7 per cent over the last month compared with the same period the previous year.
"This is continuing a trend since the beginning of the year in which sales have been lower and that is casting a shadow on the market and pressuring crude oil prices," said Andrew Lipow, president of Lipow Oil Associates. "Gasoline demand is going to be the story going forward."
Yesterday, the global benchmark fell near 2017 lows as rising US stockpiles and ramped up production of shale gas undercut the Organisation of the Petroleum Exporting Countries' (Opec) efforts to reduce the global supply glut.
Opec and non-Opec producers including Russia agreed to cut output by 1.8m barrels per day (bpd) over six months.
"Crude oil has been under pressure for the past three weeks with US production growth slowing Opec and non-Opec producers' efforts to balance the market. Expectations for demand in the US, the world’s largest consumer, has also been called into question following weak first quarter growth and car sales data that showed a fourth monthly reduction," said Ole Hansen, head of commodity strategy at Saxo Bank.
Although oil prices haven't made the gains producers had hoped for from Opec's cuts, prices are still well above the lows seen at the beginning of last year. UK oil major BP yesterday revealed higher oil prices helped it smash analyst forecasts. Brent crude prices averaged around $54 per barrel in the first quarter of this year compared with just under $34 a barrel in the same period last year.