On the New York Mercantile Exchange, light, sweet crude futures for delivery in April CLJ7, +1.51% traded at $54.04 a barrel, up $0.45, or 0.8% in the Globex electronic session. April Brent crude LCOJ7, +1.56% on London’s ICE Futures exchange rose $0.43, or 0.8%, to $56.27 a barrel.

Prices retreated on Wednesday by around 1.4% after a three-session winning streak, mainly due to technical selling, said Ben Le Brun, a market analyst at optionsXpress.

Since the end of 2016, money managers have increased net-length in crude contracts by the equivalent of some 100 million barrels, consultancy firm FGE said. “As long as oil markets continue in the current bullish mood, the record-high net longs position is likely to persist,” it noted.

Data shows the 20 oil producers, in and outside of the Organization of the Petroleum Exporting Countries, have largely kept their promise to slash collective output by 1.8 million barrels a day. However, steady uptick in U.S. crude production and inventories is stoking concerns that global supply remains bloated despite these cuts.

U.S. producers likely added another 3.4 million barrels to the latest total of 518 million barrels for the week ended Feb. 17, according to analysts surveyed by The Wall Street Journal. They also estimated gasoline stockpiles to have fallen by 1.2 million barrels and stockpiles of distillates to fall by 400,000 barrels.

Data from industry group American Petroleum Institute showed a 884,000-barrel decrease in crude supplies, a 893,000-barrel decline in gasoline stocks and a 4.2-million-barrel decrease in distillate inventories, according to a market participant.

Official data from the U.S. Energy Information Administration will be released later today.

Year-to-date, crude stockpiles in the U.S. grew by 39 million barrels while gasoline stocks expanded by nearly 24 million barrels according to EIA data.

With oil prices staying above the $50 per barrel mark, more shale drillers are returning to the oil fields, suggesting U.S. crude oil production will likely continue to increase, said the agency. It estimates total U.S. production to average 9.0 million barrels a day in 2017 and 9.5 million barrels a day next year.

Such development will bludgeon OPEC’s effort to dry out the market and potentially push oil prices back to the low $50s or high $40’s range, analysts warned.

“OPEC will need to keep the limits on production beyond the initial six-month term if inventories are to be drawn down over the second half of the year,” said Tim Evans, a Citi Futures analyst. OPEC is scheduled to meet in May to review the cuts and discuss whether to extend the production curtailment further.

Nymex reformulated gasoline blendstock for March RBH7, +1.76% — the benchmark gasoline contract — rose 97 points to $1.5230 a gallon, while March diesel traded at $1.6401, 105 points higher.

ICE gasoil for March changed hands at $495.75 a metric ton, up $6.25 from Wednesday’s settlement.

Source: Market Watch