Oil prices are slowly recovering from a four-month low after the US reported a substantial increase in stocks that concerned investors about the effectiveness of OPEC-led output cuts.
Brent crude that dropped to $49.71, the lowest since 30 November last year, trading at $50.84 a barrel, while US light crude gained 20 cents to reach $48.24 a barrel, reported Reuters.
The US Energy Information Administration earlier stated that the country’s crude stock increased by 5 million barrels in the last week to touch 533.1 million, much higher than the predicted level.
The gradual rise in US inventory has been largely offsetting the OPEC-led output cut.
Since the beginning of this year, OPEC has cut output by 1.8 million barrels.
OPEC members have mostly complied with the agreed deal, while non-OPEC members fell behind their pledged cuts.
AxiTrader chief market strategist Greg McKenna was reported by Reuters as saying that oil prices may fall further due to rising US output and lack of compliance by some oil exporters.
However, London-based Barclays bank predicted that the weakness in the latest oil price will not continue as its analysts expect prices to climb in the range of $50 and $60 in the next quarter.
The bank added that the oil inventory of industrialised nations would have been completely consumed by the start of the second quarter, triggering fresh demand for crude.