US West Texas Intermediate crude futures were down 18 cents, or 0.35%, at $50.97 a barrel.

 

Traders said the declines were due to rising US crude production that bolstered inventories to record levels.

 

US fuel inventories and oil production levels are key to whether the US remains the world's biggest oil importer, helping to support prices, or if soaring output and large stocks cut imports, which would weigh on oil markets.

 

The US Energy Information Administration (EIA) reported an increase of 1.57 million barrels in crude inventories late on Wednesday, bringing total US stocks to a record of 535.5 million barrels .

 

"Overnight crude inventory numbers pulled the rug out from under the feet of the oil rally," said Jeffrey Halley, senior analyst at futures brokerage OANDA.

 

The record crude inventories came as US oil production rose 52,000 barrels per day to 9.2 million bpd , a more than 9% increase since mid-2016 to levels last seen at the start of the market slump in late 2014 and early 2015.

 

Within the US crude inventories, stocks at Cushing , the delivery hub for WTI, rose 1.4 million barrels to a record 69.1 million barrels. Rising stocks at Cushing, in Oklahoma, typically tend to depress the price of the US benchmark.

 

Cushing crude tank farms have a total storage capacity of 77 million barrels, said Ole Hansen, head of commodity strategy at Saxo Bank.

 

Because of the glut, US crude exports have soared to a record 1.1 million bpd, with most cargoes going to Asia, where traders say there are early signs of a tightening market due to efforts led by Opec to cut output in an effort to prop up prices.

 

"The global picture is more important (than just the US) and stocks are being drawn," said Oystein Berentsen, managing director at oil trading company Strong Petroleum in Singapore.

 

In the short-term, he said, a lot of oil was being sold out of storage around the world, adding to the imminent glut.