NEW YORK: Oil prices eased on Thursday, as support from a weaker dollar was offset by a stubbornly high level of US inventories near record highs that suggested OPEC-led output cuts were starting to drain supplies.
The Organization of the Petroleum Exporting Countries and some non-OPEC producers cut production from Jan. 1 to reduce record stocks of crude. But an oil price rally after the deal has been hobbled by data showing persistently rising US stockpiles.
Figures this week showing a modest slide in stockpiles in the United States, the world's biggest oil consumer, helped lift oil prices in the previous session after they tumbled to three-month lows.
The US Energy Information Administration said on Wednesday that crude inventories fell last week, the first decline after nine weeks of increases, but only a dip of 237,000 barrels from a record high.
"Market focus remains centered on escalating US production growth and elevated domestic inventory levels, but this is not representative of the rest of the world. Inventories are drawing in several other key regions," RBC Capital Markets analysts said in a note.
"Despite the broad-based headlines of a holistic global oil surplus, we contend that certain markets such as Asia remain in a deficit, while regions like the Atlantic Basin and the US remain in surplus."
Brent crude was 6 cents lower at $51.75 a barrel by 11:09 EDT (1510 GMT), recovering from Tuesday's drop to $50.25, its lowest since Nov. 30 when OPEC announced its supply accord. The price is still nearly $7 below January's post-deal peak of $58.37.
US light crude was down 16 cents at $48.07 a barrel, also climbing from a three-month low hit on Tuesday.
Some support came from the US Federal Reserve on Wednesday after it signalled it would not accelerate plans to raise interest rates, depressing the dollar against a basket of currencies and lifting the greenback-denominated oil price.
"I don't think that's going to be a massive influence at this point in time and the main reason being that it is a small move and the risk trade is still on at this point," said Mark Watkins, regional investment strategist at the Private Client Group at US Bank in Park City, Utah.
"Unless there is a global disruption where money needs to move to a safe haven, the interest rate movement isn't going to have a long term material impact at this point in time."
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