Oil prices dropped on Thursday to their lowest level since last November, with Brent breaking below $50, amid concerns of rising global supply and still high inventories.

At 11:22am EDT, WTI Crude was trading down 2.82 percent at $46.47, while Brent was down 2.62 percent at $49.46 -- with both WTI and Brent having effectively wiped out all the price gains since OPEC announced on 30 November 2016 the output cut deal aimed at reducing oversupply and propping up prices.

On Wednesday, a day after the American Petroleum Institute (API) injected a bit of optimism among traders by reporting a crude oil inventory draw of 4.2 million barrels, the EIA once again poured cold water on the oil bulls by reporting a much smaller decline, of 900,000 barrels, against expectations for a decrease of 2.3 million barrels.

While U.S. crude oil inventories have declined in the past couple of weeks, stocks are still at 527.8 million barrels, near the upper limit of the average range for this time of year.

In addition, production from countries not signatories to the OPEC/NOPEC deal – most notably the U.S. – is on a continuous rise since that very same deal managed to lift oil prices and keep them steadier at above $50 for a few months. Related: Kuwait Sees $80 Oil By 2020

“At some point, the market should recognize OPEC isn't the most important player in the market any more. That is non-OPEC, and, above all, U.S. shale,” Commerzbank analyst Eugen Weinberg told Reuters.

Comments and speculation ahead of OPEC’s meeting on May 25 would likely bring prices back to the $50s, according to Weinberg. “Still, the damage is there and I wouldn’t be surprised to see lower levels this summer after the meeting,” he noted.

OPEC is expected to decide at its meeting at the end of May whether to extend the production cut deal, with inventories still not drawing down as fast as expected, and oil prices now basically at the same level at which the deal was announced.

By Tsvetana Paraskova for Oilprice.com

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