PJC Piper Jaffray Companies

By Nicole Friedman and Georgi Kantchev 

NEW YORK -- Oil prices fell Friday as supply data raised concerns that the global glut of crude won't shrink as quickly as some traders expected.

Oil prices have surged in recent weeks on a weaker U.S. dollar, production outages in some regions and continued falling output in the U.S. But the global crude market remains oversupplied, analysts say, and some expect prices to fall from current levels.

"The burning question near-term is whether or not there is enough momentum to carry crude oil to $50/barrel," said fuel distributor TAC Energy in a note. "There is some doubt that this steady, somewhat tranquil climb higher can continue."

U.S. oil production fell by 51,000 barrels a day, or 0.6%, in February to 9.1 million barrels a day, the Energy Information Administration said Friday. Multiple forecasters had called for a month-on-month decline between 60,000 and 90,000 barrels a day for onshore production, said Simmons & Co. International, a division of Piper Jaffray Cos.

In addition, some analysts expect that the Organization of the Petroleum Exporting Countries has increased its output following a failed attempt to agree on a production freeze.

OPEC members met with some non-OPEC producers earlier this month to discuss freezing production, but the talks ended without an agreement. Some market participants said the failure to reach a deal could prompt some large producers, including Saudi Arabia, to continue ramping up production in an attempt to hold on to market share. The International Energy Agency will report OPEC production levels for April next month.

Higher OPEC production could offset declines in U.S. output.

Light, sweet crude for June delivery recently fell 71 cents, or 1.5%, to $45.32 a barrel on the New York Mercantile Exchange.

Brent, the global benchmark, fell 36 cents, or 0.8%, to $37.78 a barrel on ICE Futures Europe. The front-month Brent contract expires at settlement Friday. The more-actively traded June contract recently fell 87 cents, or 1.8%, to $46.90 a gallon.

Both benchmarks settled at 2016 highs on Thursday.

Bank of America Merrill Lynch estimated that global oil production in April or May is set to decline compared with last year for the first time since the beginning of 2013. The drop would come on the back of massive cuts in global exploration and production investments over the past year, the bank said.

"The market is coming into better balance and we maintain the view that the current oversupply will flip into undersupply in [the second half of the year]," said Jefferies analyst Jason Gammel in a note.

The recent price rally is helping investors look past companies' first-quarter earnings, which reflect a time period when oil prices hit multiyear lows. Exxon Mobil Corp. reported its worst quarterly results since 1999 on Friday, while Chevron Corp. reported a second consecutive quarterly loss for the first time in at least two decades.

A survey of 13 investment banks by The Wall Street Journal this week sees Brent averaging $39.25 a barrel in the current quarter, rising to $42.30 in the third quarter. Some of the banks, including Morgan Stanley and ING, see prices falling in the third quarter.

Gasoline futures for May delivery recently fell 1.1% to $1.5809 a gallon. The May contract expires at settlement Friday. The more-actively traded June contract fell 1.1% to $1.5922 a gallon.

May diesel futures fell 2% to $1.377 a gallon. June diesel fell 2.1% to $1.3788 a gallon.

Write to Nicole Friedman at nicole.friedman@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com

(END) Dow Jones Newswires

April 29, 2016 14:49 ET (18:49 GMT)

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