May 18 (UPI) -- The lingering perception that the glut of crude oil on the global market has been persistent helped push crude oil prices sharply lower early Thursday.
Crude oil prices had been on a steady rise for most of the week on word that parties to a multilateral agreement, coordinated by the Organization of Petroleum Exporting Countries to curb production could be extended into early 2018, instead of year-end 2017.
Non-OPEC members have since followed in the wake of Russia and Saudi Arabia, and Kuwait's oil minister said this week his country was firmly behind the proposal. Brokerage firm PVM said ahead of Wednesday's rally that the consensus was that parties to the deal would do whatever it takes to draw down the glut of crude oil on the market.
Crude oil prices came under pressure late Tuesday after the American Petroleum Institute reported a slight build in domestic crude oil inventories. On Wednesday, the U.S. Energy Information Administration reported a decline of 1.8 million barrels for the week ending May 12, which was lower than the expected 2.2 million barrels.
In the hour before the start of trading on Wall Street, the price for Brent crude oil was down 1.7 percent to $51.33. West Texas Intermediate, the U.S. benchmark price for oil, was lower than the previous close by 1.4 percent to $48.40 per barrel.
Crude oil prices have been in volatile territory for most of the year, swinging between the upper $50 range for Brent to the upper $40 level.
The global market for crude oil is welcoming more oil in the form of exports from U.S. offshore basins in the Gulf of Mexico. The U.S. benchmark for oil is competitive against Dubai crude oil, which had a $2.20 per barrel premium on WTI in early Thursday trading, and drawing the interest from Asian buyers.
Rising U.S. exports from offshore could spoil OPEC efforts to balance the market. Sandy Fielden, the director of research, commodities and energy at Morningstar, told UPI the perception in Asia is that OPEC crude oil is scarce because of the managed decline agreement.
"Demand for this [U.S. offshore] crude is higher in Asia, pushing Dubai prices above WTI, due to perception that OPEC members are reducing supply of heavier crude because they prefer to sell more expensive light crude to meet their quota," he said in response to emailed questions.