The commodity got an additional boost on Wednesday, when Iraqi oil minister Jabar al-Luaibi said that his country and other OPEC members are considering options to its production-cut agreement, including an extension beyond March and a deeper output cut.
OPEC, led by Saudi Arabia, and other non-OPEC members such as Russian Federation pledged they will decrease their output to by 1.8 million barrels per day in 2017 up to next year.
The US Energy Information Administration suggests their country is expected to increase shale output by as much as 79,000 barrels per day to 6.1 million barrels per day.
"Compliance looks to be a bit of an issue" if prices rise much from current levels, said John Kilduff, partner at Again Capital LLC in NY.
The U.S. West Texas Intermediate crude October contract was at $50.39 a barrel by 06:35 a.m. ET (10:35 GMT), down 30 cents or about 0.59%, off the previous session's four-month peak of $50.79.More news: Amazon Great Indian Festival Sale: 5 hot deals on laptops
More news: Russian Helicopters Mistakenly Fire at Civilians During Exercise
More news: DeShone Kizer Exits Game Due to Migrane, Kevin Hogan Stars At Quarterback
"The oil price is on course for a rise of almost 16 percent this quarter, which would make this year's performance the strongest for the third quarter since 2004". "The latest data suggests that even if it is, they would not do so just yet", said Tamas Varga, analyst at PVM Oil in London. It is still too early to decide on actions to take beyond March next year, the Iraqi minister said, reigniting market speculation about whether OPEC would or should cut deeper to speed up the rebalancing of the market. USA shale production, especially, has been growing to record highs. The increase was the first in four weeks.Hedge funds and other money managers cut their bullish bets on U.S. crude futures and options in the week to September 12, the U.S. Commodity Futures Trading Commission reported on Friday.
Hurricanes in the Gulf of Mexico have pushed up crude inventories as some USA refineries have been shut by flooding.
Rising U.S. production is "a reminder to the market that OPEC has a significant problem on its hands from the continued rise in shale output", Again Capital's Kilduff said.
But, because OPEC members Libya and Nigeria were exempted from cutting and non-compliance by others, oil markets remain amply supplied, triggering calls for stricter or extended cuts. Also, over the past two months the structure of the Brent forward curve 0#LCO: has moved into backwardation, when prices for immediate delivery are higher than prices for later delivery, from contango.