By Jenny W. Hsu 
 

Oil prices have turned slightly lower in Asia on Friday after initially trading higher following Thursday's pullback in the U.S.

Market participants are weighing signs of a shrinking global glut and the possibility some oil producers being ready to crank up their output.

Overnight, the international benchmark Brent hit reached the $50/barrel level for the first time in more than a month before the slide in U.S. trading that some attributed to profit-taking. On the New York Mercantile Exchange, light, sweet crude futures for delivery in September recently traded down 3 cents in Asia at $46.89 a barrel in the Globex electronic session. September Brent crude on London's ICE Futures exchange also fell 3 cents, to $49.26.

"The lack of follow-through" after breaching $50 "suggests that Brent may have come a little bit late to the party," said Tim Evans, a Citi Futures analyst. That as Brent has lagged U.S. oil prices during other recent breakouts.

Some others, such as Li Li at China ICIS, say that while market fundamentals still dominate, automated systems that trade based on trends have become more influential. As such, this year's negative momentum has been hard to break.

Still, there are some bullish factors in play.

U.S. oil inventories have been falling for several months even with continued output growth, suggesting demand increases are gathering steam. Meanwhile, there's been reports that end-of-May oil storage in Saudi Arabia was at its lowest level since the start of 2012.

Also, China is set to significantly loosen restrictions on private firms entering the domestic distribution and storage space. That "may spur an upsurge in private storage-capacity growth," said BMI Research, and boost crude imports. China recently ousted the U.S. as world's biggest recipient of international oil, an average 8.5 million barrels a day in the first half of 2017.

On the docket near-term is later Friday's weekly U.S. oil-rig data and Monday's meeting of delegates from the Organization of the Petroleum Exporting Countries to review the ongoing production-cut deal and discuss adding Nigeria and Libya to the pact. They are currently exempt but have seen output rise sharply this year.

U.S. refined-product price were also little changed in Asia, with September Nymex reformulated gasoline blendstock off 0.1% at $1.6044 a gallon and diesel flat at $1.5481. Meanwhile, August ICE gasoil fell 1.1% to $458.25 a metric ton.

Write to Jenny W. Hsu at jenny.hsu@wsj.com

(END) Dow Jones Newswires

July 20, 2017 22:59 ET (02:59 GMT)