Oil prices fell on Wednesday after data showed an increase in US crude inventories, stoking concerns that markets remain oversupplied despite efforts by top producers Saudi Arabia and Russia to extend output cuts.
Brent crude was down 20 cents, or 0.4 per cent, from the last close at $51.45 per barrel at 0647 GMT.
US West Texas Intermediate (WTI) crude was at $48.39, down 27 cents, or 0.6 per cent.
US crude inventories rose 882,000 barrels in the week ending May 12 to 523.4 million, data from the American Petroleum Institute (API) had showed on Tuesday.
Brent reached $52.63 a barrel on Monday and WTI rose as high as $49.66 a barrel after Saudi Arabia and Russia agreed on the need for a 1.8 million barrels per day (bpd) crude supply cut by the Organization of the Petroleum Exporting Countries (OPEC) and some other producers to be extended until the end of March 2018.
Official US storage data will be released by the Energy Information Administration (EIA) later on Wednesday.
“The vulnerability of OPEC's ... rhetoric was starkly revealed ... as the US API crude inventories showed an unexpected increase,” said Jeffrey Halley of futures brokerage OANDA.
There are also rising amounts of tankers storing oil offshore China as facilities on land are full.
The extension of the supply cuts, which started in January and were supposed to end in June, is seen as necessary by some as they have not so far significantly tightened the market or propped up prices.
The International Energy Agency had said on Tuesday that commercial oil inventories in industrialised countries rose 24.1 million barrels in the first quarter of 2016, despite the cuts.
“The agreement by OPEC to extend cuts into 2018 is critical,” said AB Bernstein in a note.
Adding to ongoing oversupply concerns, North Sea oil production, generally seen in terminal decline, is expected to jump by a net 400,000 bpd, a fifth of total output, in the next two years as producers improve efficiency.
This adds to a 10 per cent jump in US production since mid-2016 to 9.3 million bpd, not far off top producers Russia and Saudi Arabia.
Jefferies bank said it was lowering its oil price forecasts "between 3 per cent and 22 per cent” due to this surprisingly strong rise.
Jefferies said its new Brent price estimate for the second half of 2017 was $59 per barrel, down from $61 previously.
It lowered its forecast for 2018 Brent from $72 per barrel to $64, and cut its estimate for 2019 from $85 per barrel to $67.