Global oil benchmark, Brent crude, extended its declines on Wednesday, falling below the $50 per barrel mark for the first time in three weeks.
The dip comes on the back of growing doubts that the Organisation of Petroleum Exporting Countries would cut production enough to stem the supply glut in the market.
Brent, against which half of the world’s oil is priced, fell by 81 cents to $48.98 per barrel as of 7.25pm Nigerian time on Wednesday. It had on October 2 hit $50 per barrel days after OPEC decision to reduce output.
OPEC, at the end of an informal meeting on September 28, agreed to cut production to a range of 32.5 million barrels per day to 33 million bpd from around 33.5 million bpd.
The 14-member oil cartel said the move was aimed accelerating the ongoing drawdown of the stock overhang and bringing the rebalancing forward.
US crude stockpiles fell by 553,000 barrels last week, the Energy Information Administration said, a result contrary to the 1.7 million-barrel build that analysts polled by Reuters had forecast.
Crude inventories in the world’s largest oil producer have fallen unexpectedly in seven of the past eight weeks, bucking the trend usually seen during autumn when stockpiles rise as refineries go into maintenance.
Oil prices pared losses after the EIA data, with U.S. crude briefly trading in positive territory. But the rebound was limited by doubts about whether OPEC, which meets November 30 in Vienna, will succeed in reducing a global crude glut.
Brent had on August 18 hit a high of $50.69 per barrel amid expectations of a possible freeze in production levels, but later dropped below $50.
It had on June 8 climbed by as much as 2.1 per cent to touch $52.54, the highest price since last October.
But it later fell to as low as $43 on July 27 after official United States energy data showed an unexpected glut of oil in storage.
Oil prices had rallied from lows of under $28 per barrel in January to trade above the $50 per barrel mark in June, spurred by a string of international oil production outages in the second quarter that offered temporary respite from the global glut.
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