Investing.com - Oil prices fell sharply during U.S. morning trade on Wednesday, reversing earlier gains, after the head of the International Energy Agency predicted a "significant" boost to U.S. output.
Crude oil for February delivery on the New York Mercantile Exchange fell nearly 2.4% to a session low of $51.21 a barrel, a level not seen since January 11.
It was last at $51.57 by 10:15AM ET (15:15GMT), down 93 cents, or around 1.8%, after rising 11 cents, or 0.2%, a day earlier.
Elsewhere, Brent oil for March delivery on the ICE Futures Exchange in London slumped $1.01, or about 1.8%, to $54.46 a barrel, after falling 39 cents, or 0.7%, in the prior session.
Oil sold off after IEA Executive Director Fatih Birol said that higher oil prices will trigger a “significant” increase in U.S. shale output as OPEC and other producers rein in supply.
Market players may be viewing the comments as a “pre-release” of the IEA’s monthly oil market report due Thursday.
OPEC signaled a falling oil supply surplus in 2017 on Wednesday as the producer group's output declines from a record high.
In its monthly oil market outlook released earlier, OPEC said its members pumped 33.085 million barrels per day in December, down 221,000 bpd from November.
As well as reporting lower output from its own members, OPEC cut its forecast of supply in 2017 from non-member countries following pledges by Russia and other non-members to join OPEC in limiting output.
OPEC now expects non-OPEC supply to rise by 120,000 bpd this year, down from growth of 300,000 bpd last month, despite an upwardly revised forecast of U.S. supply.
January 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day to 32.5 million for the next six months.
The deal, if carried out as planned, should reduce global supply by about 2%.
However, some traders remain skeptical that the planned cuts will be as substantial as the market currently expects.
While some major oil producers, such as Saudi Arabia and Kuwait, have so far showed signs that they are sticking to their pledge to cut back output, others, such as Libya and Iraq have ramped up production.
A monitoring committee charged with tracking adherence to the global deal is due to meet in Vienna for the first time on January 22.
Meanwhile, market players looked ahead to weekly data from the U.S. on stockpiles of crude and refined products.
Industry group the American Petroleum Institute is due to release its weekly report at 4:30PM ET (21:30GMT) later on Wednesday. Official data from the Energy Information Administration will be released Thursday, amid forecasts for an oil-stock drop of 960,000 barrels.
The reports come out one day later than usual due to Monday's Martin Luther King Jr. holiday.
Elsewhere on Nymex, gasoline futures for February declined 4.1 cents, or 2.6% to $1.560 a gallon, while February heating oil slumped 2.5 cents, or 1.5%, to $1.623 a gallon.
Natural gas futures for February delivery lost 6.3 cents, or 1.85%, to $3.349 per million British thermal units, as weather forecasts for the end of January turned warmer.