Oil prices were lower during European morning hours on Wednesday, after data overnight showed a massive build-up in U.S. crude supplies.
Crude oil for March delivery on the New York Mercantile Exchange shed 39 cents, or around 0.7%, to $52.82 a barrel by 3:15AM ET (08:15GMT), after gaining 27 cents, or 0.5%, on Tuesday.
Elsewhere, Brent oil for April delivery on the ICE Futures Exchange in London dipped 35 cents, or about 0.6%, to $56.63 a barrel. The global benchmark rose 38 cents, or nearly 0.7%, a day earlier.
After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories rose by a whopping 9.9 million barrels in the week ended February 10.
The API report also showed a gain of 720,000 barrels in gasoline stocks, while distillate stocks rose 1.5 million barrels, highlighting continued builds in refined products seen as an overhang on the market.
The U.S. Energy Information Administration will release its official weekly oil supplies report at 10:30AM ET (15:30GMT) Wednesday, amid analyst expectations for a rise of 3.5 million barrels.
Gasoline inventories are expected to fall by 752,000 barrels while stocks of distillates, which include heating oil and diesel, are forecast to drop by 696,000 barrels.
Futures have been trading in a narrow range around the lower-to-mid-$50s over the past month as sentiment in oil markets has been torn between hopes that oversupply may be curbed by output cuts announced by major global producers and expectations of a rebound in U.S. shale production.
U.S. drilling activity has risen by almost 7% since mid-2016, taking it back to levels seen in late 2014, when strong U.S. crude output contributed to a collapse in oil prices.
The revival in U.S. drilling has raised concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.
OPEC and non-OPEC countries have made a strong start to lowering their oil output under the first such pact in more than a decade as global producers look to reduce oversupply and support prices.
Latest data showed the group’s production in January declined by 890,000 barrels a day from the previous month to 32.14 million barrels a day. The drop indicates a 90% compliance level so far by producers who had agreed to curtail their output.
January 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day to 32.5 million for the next six months.
Elsewhere on Nymex, gasoline futures for March declined 0.4 cents, or 0.3%, to $1.538 a gallon, while March heating oil lost 1.1 cents ,or 0.7%, to $1.626 a gallon.
Natural gas futures for March delivery jumped 5.0 cents, or 1.7%, to $2.955 per million British thermal units.