Oil traded near $49 a barrel as Saudi Arabian Energy Minister Khalid Al-Falih expressed concern about high global inventories a day after the U.S. reported its stockpiles declined for the first time this year.

Futures traded in a $1.17-a-barrel range. OPEC and non-OPEC producers may extend an agreement to reduce output past June if supplies remain above average levels, Al-Falih said Thursday in an interview with Bloomberg Television. U.S. stockpiles slipped 0.04 percent last week from the record, and output rose. Iraq plans to boost production to 5 million barrels a day by year’s end, Oil Minister Jabbar Al-Luaibi said Wednesday at a briefing in Basra.

Oil broke below $50 a barrel on March 9 for the first time since December as rising U.S. supplies made up for some of the output reductions pledged by OPEC and non-OPEC producers to rebalance the market. An Organization of Petroleum Exporting Countries report Tuesday showed Saudi Arabia’s production rebounded above 10 million barrels a day in February, though it remains below the ceiling set under the six-month deal that started Jan. 1.

“The market is having a hard time getting over that supplies are still pretty strong, even though commercial inventories fell,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone.

West Texas Intermediate crude for April delivery fell 11 cents to settle at $48.75 a barrel on the New York Mercantile Exchange. Earlier, it climbed as high as $49.62 and slid to $48.45. Total volume traded was about 12 percent above the 100-day average.

Brent for May settlement decreased 7 cents to end the session at $51.74 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of $2.50 to May WTI.

Saudi View

Saudi Arabia will review its oil strategy in the middle of the second quarter and do what it takes to make the industry healthy, Al-Falih said. The market is currently going in the right direction and fundamentals have improved considerably, though transparency about global inventories isn’t great, he said.

Saudi Arabia Says Oil-Supply Cuts May Be Extended If Necessary

The curbs will be sustained if stockpiles are “still above the five-year average, if the markets are still not confident in the outlook, if we don’t see companies and investors feel good about the health of the global oil industry,” he said in the interview in Washington. “We want to signal to them that we’re going to do what it takes to bring the industry back to a healthy situation.”

U.S. crude inventories slipped from the highest level in more than three decades last week to 528.2 million barrels as crude imports declined by 745,000 barrels a day, Energy Information Administration data showed Wednesday. Oil production surged for a fourth week to 9.11 million barrels a day and stockpiles at Cushing, Oklahoma, the biggest U.S. storage hub and the delivery point for WTI futures, climbed by 2.13 million barrels to 66.5 million.

U.S. crude imports “could just as easily recover,” Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida, said by telephone. “The result of yesterday’s optimism, I take with a grain of salt. I’m not yet convinced that crude oil inventories are going to just fall away going forward.”

Options Expiration

April WTI crude oil options expired at the close of trading Thursday. The most actively traded WTI oil options include the May $55 calls, April $49.50 calls, April $49 calls, April $50 calls, as well as April $48.50 puts. WTI options volume was at 155,796 lots on Thursday.

See also: Wall Street keeps faith with oil recovery even as prices buckle

Oil-market news:

  • Iraq exported 3.87 million barrels a day from its southern and northern shipment hubs in February, Oil Ministry spokesman Asim Jihad said in an emailed statement.
  • China’s in talks with Saudi Arabia for its sovereign wealth fund and largest energy company to invest in the initial public offering of the Saudi state oil producer, according to people with knowledge of the matter.
  • Oil markets are still struggling to clear a surge in supply from OPEC at the end of last year, according to an International Energy Agency report on Wednesday.

--With assistance from Grant Smith Catherine Traywick and Kathleen Hays

To contact the reporter on this story: Jessica Summers in New York at jsummers24@bloomberg.net.

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Margot Habiby, Debarati Roy