Oil slides as gasoline inventories build

"The battle between the "sheiks and the shale oil producers" is far from decided. with all attempts by OPEC to achieve a lasting production deficit on the oil market being torpedoed by non-OPEC producers - first and foremost the US", analysts at Commerzbank wrote.

Although crude inventories fell by 840,000 barrels in the week to April 14 to 531.6 million barrels, they held near record highs, while gasoline stocks rose by 1.4 million barrels as refinery runs increased by 334,000 bpd.

Moreover, oil prices were under pressure as a stronger US dollar dented investor sentiment, which made the dollar-denominated oil less attractive for holders of other currencies.

US crude futures closed the day down 3.76 percent, trading at $50.44 per barrel and hovering only slightly above the key $50 level, while Brent crude futures dropped almost $2.30 to trade around $52.70 a barrel.

"Some of the people who picked up contracts below $50 made a decision to run out ahead of expiration", said Gene McGillian of Tradition Energy.

"The fact that gasoline stocks rose. anxious traders that demand is not as strong as many thought", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

And OPEC, in the wake of its production-freeze agreement late previous year, appears to be once again losing market share - the recapturing of which was the reason the oil sheiks engaged in their price war in 2014 in the first place.

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Increasing US output is undermining attempts by the Organization of the Petroleum Exporting Countries and other major oil producers to curb output and sustain a price rally in a market that has been oversupplied since mid-2014.

Kilduff also noted that USA daily production increased to 9.25 million barrels per day.

Last week the prices of oil had gone past $53 a barrel following the push by some producers to extend the OPEC supply cut deal by the more than 6 months that had been settled on.

Production in the Marcellus was 18 Bcf/d in the same month a year ago.

At the same time, Citi experts warn that a failure to extend the output agreement may "precipitously" lower prices for crude, as increased supplied in late 2016 is still "a dark cloud hanging over the market". US crude inventories were at 532.3 million barrels, only about 3 million barrels less than the record reached in March.

Citigroup's analysts had estimated in February that oil prices would rise to $70 a barrel this year as supply and demand levels continued to rebalance, CNBC reported.

The United States is working with allies and China on responses to the failed test, U.S. President Donald Trump's national security adviser said on Sunday.

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