Crude futures were trading more than 30 cents higher in Asia early Thursday, but the recovery, against a rout of almost $2/barrel at the previous day's close, was more likely bargain-hunting than the start of a full correction, as the weekly counter-seasonal build in USA gasoline inventories continued to weigh on market sentiment.
More barrels could be on their way to market from USA shale fields as financial companies are investing billions in production, a Reuters analysis showed.
Oil had rallied above $53 a barrel after some members of the Organization of Petroleum Exporting Countries voiced support for prolonging cuts past June, but rising US output is undermining the effort to trim a global glut.
Gasoline stocks posted a counter-seasonal build of 1.5 million barrels, despite heavier refining activity.
U.S. West Texas Intermediate (WTI) crude futures had risen 31 cents, or 0.61 percent, to $50.75 a barrel.
"The glaring rise in USA gasoline refined product inventories, in combination with persistent lower-48 production growth, keeps us cautious on oil prices", said Chris Kettenmann, chief energy strategist at Macro Risk Advisors LLC in NY. USA crude futures were up 43 cents at $50.87 a barrel. A surprise build in gasoline inventories despite heavier refining activity, along with an increase in US crude production, largely pushed prices lower.
On Wednesday, the Organization of the Petroleum Exporting Countries' Secretary-General Mohammad Barkindo called on all non-OPEC producers who aren't part of the output-cut agreement to join the pact, according to a news report from Platts.
Still, Saudi energy minister Khalid al-Falih on Thursday said a preliminary agreement to continue cuts for another three or six months is within reach and could be approved at OPEC's next meeting on May 25. USA production rose to 9.252 million barrels a day in the most recent week, highest since August 2015.
OPEC's compliance with the pledged cuts improved to 104 percent in March from 90 percent in February, while the rate for non-OPEC producers in the accord rose to 64 percent from 38 percent over the same two months, the International Energy Agency said in an April 13 report.
"The market sentiment appears to be that the increases in USA shale production outweighs the OPEC action and the market is keeping the loss we had yesterday", he said. The increase in exports increased concerns over excess global supply and could also undermine potential crude demand over the next few months, especially if China is forced to curb output.
Data from the American Petroleum Institute (API) on Tuesday showed that USA markets remained bloated.