Oil prices recovered slightly on Wednesday from steep slides the previous day, but traders said markets remained under pressure from signs that planned OPEC output cuts were being poorly implemented and as supplies from elsewhere rose. U.S. West Texas Intermediate (WTI) crude oil futures were trading at $50.98 a barrel at 0028 GMT, 16 cents above their last settlement, but 6.25 percent below the start of the year. Prices for Brent crude futures, the international benchmark for oil prices, were yet to trade.
“Traders continued to fret about rising U.S. supply and compliance by OPEC to agreed-upon production cuts,” ANZ bank said on Wednesday.
The U.S. Energy Information Administration (EIA) said on Tuesday that increased drilling activity was set to boost crude oil production this year by 110,000 barrels per day (bpd) to 9 million bpd compared with a year ago. Last month, it said production would fall by 80,000 bpd.
For 2018, oil production is set to rise by 300,000 bpd to 9.3 million bpd, the EIA added.
Another concern for traders is high U.S. crude stockpiles, with the EIA is scheduled to release its latest figures on Wednesday.
“Traders appeared nervous ahead of this week’s EIA report. With inventories at the highest seasonal level in three decades, another increase in this week’s report could see prices come under further pressure,” ANZ said.
Outside the United States, there were lingering doubts over compliance with planned production cuts from members of the Organization of the Petroleum Exporting Countries (OPEC).
OPEC’s second biggest producer Iraq, plans to raise crude exports from its southern port of Basra to an all-time high in February, keeping shipments high even as OPEC production cuts take effect this month.
The country’s State Oil Marketing Company (SOMO) plans to export 3.641 million barrels per day (bpd) of crude in February, according to trade sources and preliminary loading schedules, potentially beating a record of 3.51 million bpd set in December.
Some cuts, however, appear to be coming. In Russia, which isn’t an OPEC member but which also agreed to cut output, extreme cold as low as minus 60 degrees Celsius has already helped to knock out production by around 100,000 bpd in the first few days of January, and many oil engineers expect more reductions as production facilities struggle to cope with the extreme conditions.