West Texas Intermediate crude for February delivery lost as much as $1.33 to $50.98/bbl on the New York Mercantile Exchange, and was at $51.50 as of 11:25 a.m. local time.
Stock markets are still up so far this month, which has given oil investors more confidence to bet aggressively on a rise in crude prices.
Saudi Arabia slashed its crude shipments to refiners in the U.S.by 32% to 684,000 bpd in the week ended January 11, after exporting more than 1 MMbpd the previous week, according to preliminary data from the EIA.
"The impact of higher oil prices in 2018 is fading, which will help offset lower economic growth", the Paris-based IEA said in its monthly report.
The administration added that USA crude production rose to 11.9 million barrels per day last week.
Since the EIA report is positively correlated with API, the market will be trading crude oil with a bullish sentiment.
It was the biggest decline since February 2016, as drillers reacted to the 40 percent plunge in USA crude prices late past year.
"Now that we're three weeks into January and the production cuts are starting to bite, it's a strong signal for shorts to cover", said Chris Kettenmann, chief energy strategist at Macro Risk Advisors LLC.
In particular, OPEC member states are to reduce production by 812,000 barrels per day - to 25.937 mln barrels, non-OPEC oil producers - by 383,000 barrels per day, to 17.937 mln barrels.
Other bearish factors, according to Perrin are the uncertainties about world economic growth, which will obviously impact oil demand, and global trade tensions, especially between the U.S. and China. "By the middle of the year, USA crude output will probably be more than the capacity of either Saudi Arabia or Russian Federation", the IEA said.
China, as the world's second-largest economy and largest crude oil importer, took advantage of the low oil prices in late 2018 and imported a record 10.35 million bpd in December 2018, amid independent refiners lifting their import quotas.
Crude prices also drive the cost of fuel made at the Marsden Point refinery, and the country's seasonal imports and exports of LPG.