Oil markets dipped on Thursday, weighed down by rising crude inventories and production in the United States as well as a stronger dollar, which potentially hampers fuel consumption in countries that use other currencies at home.
Brent crude futures, the international benchmark for oil prices, were at $56.18 a barrel at 0438 GMT, down 11 cents, or 0.2 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $50.67 per barrel, down 2 cents from the last settlement.
Traders said that a strengthening dollar had weighed on Brent while rising crude stocks and production in the United States had weighed on WTI.
U.S. commercial crude oil inventories rose for a third straight week, building by 4.6 million barrels in the week ending Sept. 15 to 472.83 million barrels.
Meanwhile, U.S. oil production has largely recovered from the shutdowns following Hurricane Harvey, currently standing at 9.51 million barrels per day (bpd), up from 8.78 million bpd directly after the storm hit the U.S. Gulf Coast.
But demand for American crude oil could pick up soon, should the Organization of the Petroleum Exporting Countries (OPEC) extend a production cut aimed at tightening supplies and propping up prices.
OPEC is due to meet in Vienna on Friday to discuss extending its deal to cut production along with non-OPEC oil producers that has been in place since January. The deal is due to expire at the end of March 2018.
Under the deal, OPEC members and some non-OPEC countries pledged to cut production by 1.8 million bpd from January to tighten the market and prop up prices.
But, because OPEC members Libya and Nigeria were exempted from cutting and non-compliance by others, oil markets remain amply supplied, triggering calls for stricter or extended cuts.
"Exempt members Libya and Nigeria may be bought into the fold of the production cut deal. There also remains the possibility that an extension of the agreement or an increase in the cuts may be announced," said Jeffrey Halley, senior market analyst at futures brokerage OANDA.
There are indicators that the supply cuts are having the desired effect.
Front-month Brent futures prices have risen by more than a quarter since June. Also, over the past two months the structure of the Brent forward curve has moved into backwardation, when prices for immediate delivery are higher than prices for later delivery, from contango.
The shift is seen as an indicator of a tightening market as it incentivises the immediate sale of oil rather than holding it in storage.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)