Oil prices edge up after dip

Crude prices inched higher in early dealings on Thursday, but held near the prior session’s three-week lows amid concerns over rising production in the U.S.

U.S. West Texas Intermediate (WTI) crude futures tacked on 17 cents, or about 0.3%, to $56.13 a barrel by 3:50AM ET (0850GMT), after plunging 2.9% a day earlier, its biggest daily decline in more than two months. Prices touched an intraday low of $55.82, their worst level since Nov. 20.

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., were at $61.50 a barrel, up 28 cents, or around 0.5%, from their last close. The contract suffered a drop of 2.6% in the prior session after hitting its lowest since Nov. 17.

Oil prices sank on Wednesday after data from the U.S. Energy Information Administration showed a big jump in U.S. fuel inventories while domestic production hit another weekly record.

The latest EIA weekly data showed U.S. gasoline stocks rose by 6.8 million barrels, much higher than expectations.

U.S. crude oil production rose by 25,000 barrels per day (bpd) last week to 9.71 million bpd, bringing output close to levels of top producers Russia and Saudi Arabia.

The report also showed that U.S. crude oil inventories fell by 5.6 million barrels to 448.1 million, putting stocks below seasonal levels in 2015 and 2016.

Fears that rising U.S. output would dampen <a href=’https://staging.theenergyyear.com/companies-institutions/opec/’>OPEC’s efforts to rid the market of excess supplies are weighed on sentiment, according to market participants.

The producer group, along with some non-OPEC members led by Russia, agreed last week to extend current oil output cuts for a further nine months until the end of 2018. The deal to cut oil output by 1.8 million barrels a day (bpd) was adopted last winter by OPEC, Russia and nine other global producers. The agreement was due to end in March 2018, having already been extended once.

In other energy trading, gasoline futures tacked on 0.3 cents, or 0.2%, to $1.670 a gallon, after hitting its lowest since mid-October in the previous session, while heating oil added 0.7 cents to $1.868 a gallon.

Natural gas futures sank 5.3 cents, or 1.8%, to $2.869 per million British thermal units, as traders looked ahead to weekly storage data due later in the global day.