Oil prices back in the $40s, sink to 5-month low

Crude is now back to levels last seen before the Organization of the Petroleum Exporting Countries (OPEC) and other producers said they would cut output by nearly 1.8 million barrels per day (bpd) during the first half of the year in a bid to tighten the market.

Oil prices fell for the fourth day in a row on Thursday, nearing their lowest level since late March after data showed a lower than expected decline in US inventories.

The concern over rising global supply and stubbornly high inventories relatable wiped out most of the gains made since OPEC announced its first supply cut in eight years. OPEC member nations are to discuss the deal later this month.

"In January of this year Azerbaijan produced 793,900 barrels of oil per day, in February - 776,400 barrels, and in March - 733,300 barrels per day", the ministry said.

"What we've seen in terms of the rebound today is really just a bit of a correction following an oversold market over the past several days", Michael Tran, a commodities strategist at RBC Capital Markets in NY, said by telephone.

A combination of resilient US shale output and surprisingly sluggish demand for gasoline from American drivers has kept USA oil stockpiles at historically high levels. Other non-OPEC producers, including Russian Federation, joined the deal late past year, bringing expected cuts to about 1.8 million barrels a day. Total volume traded was about four times the 100-day average.

Brent for July settlement slumped as much as US$1.74, or 3.6 percent, to US$46.64 a barrel on the London-based ICE Futures Europe. Prices are down 5.4% this week, heading for a third weekly decline.

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One major reason behind the trend is the uncertainty whether OPEC and Russian Federation would extend their deal into the second half of the year.

Traders are looking forward to an industry report on USA crude oil and fuel stockpiles at 4:30 p.m. EDT, to be followed by government data Wednesday at 10:30 a.m. EDT.

Russian Federation thinks it will be necessary to extend its agreement to cut oil output in conjunction with OPEC beyond June, Energy Minister Alexander Novak said in an emailed statement Thursday.

Oil's retreat Thursday stoked declines in other commodities from iron ore to industrial metals.

On Monday, Libya's National Oil Co. said production had risen to the highest level since December 2014 and indicated it would continue to increase output, Reuters reported.

Even so, McGillian said: "We still have a near record overhang and signs of increasing production in areas of the world outside the producers that agreed to the cuts".

"If the oil price stays below 50 U.S. dollars (£38.65) for an extended time-period then the oil companies may see a hit on profits". "They did say current output cuts were likely to be extended", according to CNBC.

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