Oil prices continue fall, stay below $49

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Getty Images

However, reports of the USA rig count, the U.S. crude oil inventory and the United States crude oil production, all point to a resurgent U.S. shale oil industry.

"It will be interesting to see how OPEC rhetoric will evolve with this price correction".

A surprise output jump from its biggest member, Saudi Arabia, put further pressure on prices.

"For those looking for a re-balancing of the oil market the message is they should be patient, and hold their nerve", the IEA said.

"Bets on crude oil prices rising have hit a new record high for the third month in a row, giving additional support to oil prices", OPEC said.

He added that OPEC's task was more hard as it aimed to cut inventory levels rather than simply target a specific price.

In the past decrease in crude oil price was matched by the government with the frequent increase in taxes which meant that consumer did not entirely benefited from lower prices.

Oil prices will only rise if all of OPEC's member countries follow the policy to reduce oil production, but some OPEC nations have been ignoring their pledges to do so.

Brent crude ended the session 7 cents lower at $51.74 a barrel, recovering from Tuesday's drop to $50.25, its lowest since November 30 when OPEC announced its supply accord. However, in January that trend "abruptly" reversed with a 48.0m barrel build (a rate of 1.5m b/d). Prices climbed US$1.14 to close at US$48.86 yesterday after falling nearly 11 per cent the previous seven sessions. At the same time, Fitch suggests that oil production from Azerbaijan is also on the up, with output set to increase by 4.7 percent this year.

As the graphic below illustrates, Saudi Arabia has been making up for non-compliance elsewhere, cutting by 800,000 bpd - according to OPEC secondary sources.

Oil prices have been on a roller coaster ride this week following a confusing February production report from OPEC leader Saudi Arabia, but to the delight of traders the U.S. Energy Information Administration on Wednesday reported domestic crude inventories decreased by 200,000 barrels during the week ended March 10.

The EIA also reported gasoline stocks fell by 3.1 million barrels, compared with expectations for a 2-million barrel drop.

OPEC and some non-OPEC producers agreed to cut production from January 1 to reduce record stocks of global crude oil, but the deal has been dampened by data showing persistently rising us stockpiles. By 1318 GMT, oil given up some of those gains, up 70 cents at $51.62 a barrel.

Citing a survey by Baker Hughes, an oil firm, OPEC said the number of American oil rigs had risen for seven consecutive weeks and was now 55 percent higher than a year ago.

International Energy Agency stated that though the global inventories rose in January, the oil market can witness a deficit of 500,000bpd in the first half of this year.

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