Oil prices close the session higher, but markets are still concerned because there is still an oversupply because of the high output from the United States.
Brent Crude futures were trading with an increase of 9 cents which is equal to 0.2 percent from their last close and was trading at $50.36. While U.S. West Texas Intermediate crude futures were at $46.80 per barrel, which is up by just 2 cents.
The slight gains are followed by more than 1 percent in the previous session.
Energy Information Administration data on Wednesday showed that commercial U.S. crude oil stocks has fallen by to a staggering 13 percent from their highest peak in March which is at 466.5 million barrels. Stocks are now lower compared to the previous year.
The huge output coming from the U.S. undermines the efforts of the OPEC which has pledged together with countries like Russia, has pledged to restrict output by 1.8 million per day between the months of January of this year through March 2018.
“If inventory declines continue at this pace, stocks will fall back below the five-year average in around two months,” said William O’Loughlin, analyst at Australia’s Rivkin Securities.
“The pace of the declines indicates that the OPEC production cuts are having an effect, although the current oil price suggests that the market is skeptical about the longer-term prospects for rebalancing of the oil market,” he added.