Futures of crude eased from 2016 peaks on Thursday as market players locked in profits after April’s steep surge.
However, market analysts noted that dropping United States, robust investor appetite, and an easing dollar could drag prices higher soon.
Internationally traded Brent crude futures settled at $46.91 per barrel during early trading, slumping 27 cents from their last session.
On the New York Mercantile Exchange, United States West Texas Intermediate futures plunged 20 cents at $45.13 per barrel.
The declines came after benchmarks climbed on Wednesday to their highest levels for 2016, which have been the sharpest price gains in recent years.
Both West Texas Intermediate and Brent have climbed more than 70 percent since their respective 2016 slumps in January and February.
Record crude storage data may have strengthened some market players to take profits on Thursday by closing long positions, while government data on Wednesday indicated that United States crude stocks jumped 2 million barrels last week to its all-time high of 540.6 million barrels.
Despite weakening of crude prices, analysts noted that sentiment had clearly turned bullish. Analysts also noted that tumbling output in the United States, in which where Energy Aspects stated there were no even sentiments of volumes falling short of demand, and a lower greenback, boosting prices and attracting market players.
According to a commodity analyst, “The recent trend of rising crude oil prices received another boost after U.S. output was shown to have fallen again last week.”
The statement was released after the United States Energy Information Administration published that crude oil production slipped to 8.94 million barrels per day last week, dipping almost half a million barrels per day from this time last year.
Meanwhile, some analysts anticipated the market to stay filled with glut supply in the near term, adding that crude inventories should start to diminish by the third quarter.
Analysts reported that further bullish momentum could transpire because of an ongoing downturn in the dollar, which has slumped almost 6 percent this year against a basket of rival major currencies, as a lower greenback makes dollar denominated commodities, including oil, cheaper for foreign currency holders.
The Federal Reserve stated on Wednesday that it would keep United States interest rates unchanged, while the Bank of Japan noted on Thursday it would ease from expanding stimulus.
Analysts also cautioned that global spare capacity, which is forecasted to be around 2 million barrels per day or 2 percent of demand, was low given the amount of unexpected disruptions recently.
The disruptions include pipeline interruptions and the dire fiscal situation of major producers like Venezuela, Nigeria, and Iraq.