Buoyed by strong compliance with touted international production cuts, oil prices climbed on Thursday after sharp losses Wednesday afternoon.

Oil prices had plunged 5 per cent to their lowest levels in 2017 on Wednesday, Reuters News agency reports, as U.S. crude inventories surged to a new record high.

United States’ West Texas Intermediate crude CLc1 ended Wednesday session at $50.28 per barrel, down $2.86, or 5.38 per cent after falling to its lowest level since Dec. 15.

Similarly, Brent crude slumped to its lowest level since December 8 at $52.93, before settling at $53.11, down $2.81 or 5.03 per cent.

The development stoked concerns a global glut could persist even with the Organization of the Petroleum Exporting Countries, OPEC, attempting to prop up prices with output curbs.

OPEC and other oil producers reached an agreement last year to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017, with investors paying close
attention to levels of compliance with the landmark deal.

Kuwait’s oil minister said on Wednesday that OPEC’s compliance with the cuts had exceeded targets, standing at 140 per cent in February, while non-OPEC members compliance was 50-60 per cent.

International Brent crude futures were up 46 cents, or 0.87 per cent, at $53.57 per barrel. They ended the last session down 5 per cent at $53.11 a barrel, hit by a record build up in U.S. inventories.

U.S. benchmark West Texas Intermediate (WTI) crude futures gained 34
cents, or 0.68 per cent, to $50.62 a barrel. WTI plummeted 5.38 per cent to $50.28 per barrel in the previous session, marking its lowest since December.

The rise in prices on Thursday could be short-lived, said Michael McCarthy, chief market strategist at Sydney’s CMC Markets.

“One of the factors (pressuring prices) is the strengthening U.S. dollar on U.S. rate hike (expectations),” Mr. McCarthy said.

The U.S. dollar index rose on the back of stronger-than-expected U.S. jobs data and growing expectations that the Federal Reserve could raise U.S. interest rates next week. A strong dollar makes dollar-denominated oil more expensive for importing countries.

Crude inventories in the United States, the world’s top oil consumer, surged last week by 8.2 million barrels, handsomely beating forecasts of a 2 million barrel build.

“When combined with the huge speculative long positions in the market, it’s not surprising that prices sold off so strongly,” ANZ said in a note. “However, there is increasing talk of extending the OPEC production cut agreement.”

Earlier, Nigeria’s oil production that ramped up to 2.1 million bpd had dipped to 1.875 million bpd, following the shutdown of Bonga oil field by the exploration and production arm of Shell in Nigeria, Shell Nigeria Exploration and Production Company Limited (SNEPCo).

The shutdown of the flagship facility, the 225,000 barrels per day (bpd) Bonga oil field, was done for maintenance purposes.