U.S. West Texas Intermediate crude futures CLc1 were at $59.06 a barrel at 0741 GMT, down 13 cents from their last settlement. WTI was trading above $65 in early February.
Brent crude futures LCOc1 were at $62.68 per barrel, down 4 cents. Brent was above $70 a barrel earlier this month.
The Saudi energy ministry said on Wednesday that Saudi Aramco’s crude output in March will be 100,000 barrels per day (bpd) below its February level while exports would be kept below 7 million bpd.
Ongoing weakness in the U.S. dollar as well as economic growth were also somewhat supporting oil markets.
Despite this, analysts warned that not all indicators were bullish.
"While we continue to see a firming fundamental backdrop over the course of this year…investors should not discount the caution signs that have been emerging," investment bank RBC Capital Markets said in a note to clients.
"Pockets of oversupply have been emerging in the physical market," the Canadian bank said. "The tempering physical oil backdrop is … playing a central role in the recent price softness," it said.
The American Petroleum Institute said on Tuesday that U.S. crude inventories rose by 3.9 million barrels in the week to Feb. 9, to 422.4 million.
That was largely due to soaring U.S. crude production C-OUT-T-EIA, which has jumped by over 20 percent since mid-2016 to more than 10 million bpd, surpassing that of top exporter Saudi Arabia and coming within reach of Russia, the world’s biggest producer.
U.S. crude is also increasingly appearing on global markets, and more is set to come as the Louisiana Offshore Oil Port starts testing supertankers for exports.
The surge in U.S. supplies means oil may be in oversupply again soon, flipping the 2017 deficit induced by supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.
"I am confident that our high degree of cooperation and coordination will continue and bring the desired results," Saudi Arabia’s Energy Minister Khalid al-Falih said on Wednesday.
Not all agree. The International Energy Agency said expects oil demand to grow by 1.4 million bpd in 2018, but adding that output growth could outpace demand.
Citi said it expected 2018 oil markets to be balanced or in slight oversupply, forecasting a "market surplus of 0 to 0.2 million bpd."
OPEC and the IEA "are vastly underestimating the magnitude and sustainability of non-OPEC oil supply growth," Citi said.
Markets are already reacting, with physical prices for crudes from the North Sea, Russia, the United States, and Middle East becoming cheaper.
Reporting by Henning Gloystein; Editing by Joseph Radford and Tom Hogue
GLOBALES: Oil dips on looming oversupply; weak dollar, economic growth provide some support
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