Oil prices settled slightly higher in the previous sessions after a dovish movements in the markets as the market digested U.S. government data which shows that were signs of a crude glut might be receding and inventories remained large while the gasoline demand remain weak.
U.S. West Texas Intermediate crude was pinned to place higher by 15 cents at $47.82 per barrel while the Benchmark Brent crude was up by 33 cents and was sold at $50.79.
Earlier in the session, WTI was falling as low as $47.30, which was the lowest it has been since May 27, this was after the U.S. Energy Information Administration (EIA) stated that weekly crude supplies feel by 930,000 barrels for a whole of 527.8 million. That was less than half the forecast draw of 2.3 million barrels.
The Session low for the U.S. crude however was close to a 50 percent of the rally that started on August of last year. David Thompson, the executive vice-president at Powerhouse said that if prices break in lower levels the next major support zone would come in at the $45.33 to $44.09 zone.
While the market focuses on the U.S. production, Investors are also looking out whether oil producing countries have been complying with their 2016 deal to cut the output around 1.8 million barrels per day (bpd) by the middle of the year.
Russia is responsible for contributing the largest production cut outside OPEC, and as of May 1 it had cut output more than 300,000 barrels per day since it hit a high in October. Although the latest Reuters survey of OPEC production shows that the country’s compliance has fallen.