Supply issues building up to push crude oil lower early Wednesday

April 26 (UPI) -- Oil prices drifted further into negative territory in early Wednesday trading on supply-side concerns as questions circulate on OPEC-led production efforts.

Crude oil prices have moved into negative territory in recent sessions after an earlier bounce, which was supported by signs the supply builds that brought the price of oil below $30 per barrel last year were beginning to fade.

Crude oil prices lost traction in Tuesday trading after industry data from the American Petroleum Institute revealed a stockpile increase in the United States of 897,000 barrels, a surprise given the expectations of a draw of more than 1 million barrels.

Stephen Brennock, an analyst with the London broker PVM, said in a daily newsletter one of the main factors behind the slump in crude oil prices is a suggestion from Russia that its production could increase, a contrast to its commitment to help the Organization of Petroleum Exporting Countries balance the market through managed production declines.

"The country's deputy prime minister recently signaled its willingness to increase production in the latter half of this year and the specter of rising Russian oil output is casting a cloud over the market," he said in the report.

Supply builds and Russian production suggestions brought crude oil prices lower in early Wednesday trading. Brent crude oil was down 0.88 percent to $51.64 per barrel about a half hour before the start of trading in New York. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.85 percent to $49.14 per barrel.

Crude oil prices could react to broader market movements in response to an early morning announcement from U.S. Treasury Secretary Steven Mnuchin, who said the White House was ready to introduce what could be the largest tax reform effort in U.S. history. The U.S. government, meanwhile, is facing a Saturday deadline to avert a shutdown and many of the proposals from President Donald Trump, notably efforts to overhaul the Affordable Care Act, have fallen flat against bipartisan rancor in Washington.

Elsewhere, the government of Saudi Arabia, which is leading the OPEC-led efforts in terms of production cuts, has, according to a newsletter from the Royal Bank of Canada, expressed reservations about giving up a strategy to defend its energy market share. Revisions, meanwhile, to economic policies could have oil price implications.

"It is the decision to reverse the civil service salary and benefit cuts that will likely have the most significant implications for oil," Helima Croft, an analyst with RBC Capital Market, said in the emailed report. "This reversal shows the limits to austerity and more importantly, increases the need for higher oil prices."

Crude oil prices will be influenced by official data on supply and demand from the U.S. Energy Information Administration, which is released about an hour after the start of trading.