Here's Why Oil Prices Dipped to almost $50 Today

Oil prices are on pace for their biggest daily percentage decline since early March, and US crude oil production is expected to rise in both 2017 and 2018.

China's March gasoline output rose 2.5 percent year on year to 11.24 million tonnes, the highest level since at least April 2014, data from China's National Bureau of Statistics showed on Wednesday, adding fuel into an Asian market that is already well supplied. WTI rallied more than 1% early on Thursday after Saudi oil minister Khalid Al-Falih suggested major oil producers could extend their agreed upon cuts.

US crude futures were down 9 cents at $50.50 a barrel.

Brent futures were up 10 cents to $53.03 a barrel were at 1:28 p.m. EDT (1728 GMT).

"The domestic increases continue to not only offset overseas production cuts, but potentially more importantly, they also weigh on OPEC's morale as they are watching market share continue to slip away as a result of their own policy actions", he said in his latest report.

OPEC members Saudi Arabia and Kuwait signaled that an effort by the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, to cut oil output was likely to be extended beyond June.

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 continued growth in US production and the rise in stockpiles forced the market to respond bearishly based on the increased inventory outlook. The decline was mainly due to the surprise build in USA gasoline stockpiles that point to weaker-than-expected demand at a time when consumption of gasoline usually rises.

The EIA (U.S. Energy Information Administration) reported that United States gasoline inventories rose by 1.5 MMbbls (million barrels) to 237.7 MMbbls on April 7-14, 2017. USA inventories of 532 million barrels remained near all-time records reached in March. Distillate stocks reached their lowest levels since November 2015, the EIA said.

"Rising oil output in the USA remains the predominant bearish factor for prices despite growing anticipation that OPEC will extend a self-imposed cap on its oil production in the upcoming May meeting", Abhishek Kumar, senior energy analyst at Interfax Energy Global Gas Analytics said recently.

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