However, the market reacted badly as many expected OPEC to announce a deepening of production cuts with the price of Brent Crude falling 1.07% to $53.4 a barrel while West Texas Intermediate fell 1.29% to $50.7 a barrel. Nationwide crude inventories probably slid 3.25 million barrels for a ninth straight loss.
Oil prices slid hard on Wednesday on double-pronged concerns that the rift between Saudi Arabia and the other Gulf nations with Qatar, which began Monday, will wind up boosting output, and unexpectedly high USA inventories of crude and gasoline. And just a week after touting record USA crude oil exports that exceeded 1.0 million barrels of oil a day, we saw the biggest one-week drop in USA export history falling by 750,000 barrel a day. This was a surprised development because of expectations of greater demand due to the start of the USA summer driving season following the long Memorial Day holiday week-end.
The Energy Information Administration (EIA) increased its U.S. output estimates with an increase in production to 9.3 million bpd expected for 2017 while the EIA also projected that 2017 output could reach 10 million bpd.
Crude slid to its lowest level since May 9, with USA benchmark futures down more than 10 percent in 10 days of trading.
Brent for August settlement was $1.69 lower at $48.43 a barrel on the London-based ICE Futures Europe exchange. The catalyst behind the previous session's sell-off was a rise in USA inventories for the first time in 10 weeks, reigniting concerns over the global supply glut. Overall gasoline demand is down 0.7 percent for the past four weeks from a year ago, the EIA said.
The report also showed a decline in gasoline demand, despite the onset of the summer driving season following the Memorial Day holiday.
USA gasoline stockpiles probably fell by 50,000 barrels last week, according to the median forecast in a Bloomberg survey before the EIA report.
Market players remain concerned about Saudi Arabia and the United Arab Emirates, both members of the Organization of the Petroleum Exporting Countries, cutting diplomatic and transport ties with Qatar, also an OPEC member that had agreed to reduce production by 30,000 barrels a day as part of the OPEC agreement to reduce output.
The EIA left its forecast for this year's production unchanged at 9.3 million barrels a day.
"Port restrictions on Qatari flagged vessels are going to cause loading disruptions", said Jeffrey Halley, analyst at brokerage OANDA.