LONDON: Oil fell to its lowest since late November on Thursday, as concern over rising global supply and stubbornly high inventories effectively wiped out most of the gains made since OPEC announced its first supply cut in eight years.
Brent crude oil futures broke below $50 a barrel for the first time since late March, hitting an intraday low of $49.69, the lowest level since Nov. 30.
The July contract was down 82 cents on the day at $49.97 by 1252 GMT, while US West Texas Intermediate (WTI) futures fell 92 cents to $46.90 a barrel.
The Organization of the Petroleum Exporting Countries, together with major rivals such as Russia and Oman, announced on Nov. 30 that they would cut oil output for the first six months of this year to eat into a vast global overhang of unused crude.
This sparked a 25-percent rally in the price in the month that followed, pushing Brent crude to 18-month highs.
Global crude inventories have begun to erode, but fast-growing production outside the signatories to the deal, who pledged to remove 1.8 million bpd in supply from the market, have severely tested investors' faith in the ability of the world's largest exporters to tackle the glut.
The break below $50 a barrel will likely prove temporary given that OPEC is widely expected to extend its supply deal at its meeting on May 25 beyond the June expiry date, but analysts say more price weakness cannot be ruled out.
"I wouldn't be surprised to see a (price) recovery ... before the meeting. It's likely to bring prices yet again to $50. Still, the damage is there and I wouldn't be surprised to see lower levels this summer after the meeting," Commerzbank analyst Eugen Weinberg said.
"At some point, the market should recognise OPEC isn't the most important player in the market any more. That is non-OPEC, and, above all, US shale."
US data showed crude stocks fell 930,000 barrels in the week to April 28, while analysts had been expecting a drop of 2.3 million barrels. Stocks have steadily declined for the last four weeks, but at 527.8 million barrels they are just 7 million barrels off a record high.
OPEC oil output fell for a fourth straight month in April, a Reuters survey found on Tuesday, as top exporter Saudi Arabia kept production below its target, which helped offset weaker compliance by other members.
"Saudi Arabia is the only country that has fulfilled its obligation every month since January. On one hand, it shows its commitment from OPEC's kingpin to make the supply cut agreement work. On the other hand, one can only ponder how long they are willing to shoulder the burden of supporting oil prices on their own," PVM Oil Associates analyst Tamas Varga said.
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