By Sarah McFarlane and Jenny W. Hsu 

Oil prices fell on Friday as investors' confidence of a further recovery in this market waned amid signs the global glut in crude is shrinking at a slower pace than expected.

Brent crude, the global oil benchmark, fell 1% to $46.91 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1% at $45.24 a barrel.

The market remained volatile as a recent bout of so-called risk-on sentiment faded and investors digested data that showed declining production in North America but still-elevated inventories of crude and refined products around the world.

In June, global oil supply grew by 600,000 barrels a day to 96 million barrels a day, the International Energy Agency said in its latest oil report.

In the first quarter alone, growth in production at global refineries outpaced increases in demand for refined products by 60%, leaving the world drenched in unwanted fuel, the agency said.

Even with robust consumption levels in Europe, the gasoline glut is expected to remain for the rest of the year, PVM said in a note.

"Such is the extent of the European oil product glut that it may very well depress the wider energy complex and stifle the ongoing recovery in crude oil prices," the brokerage said.

On a brighter note, some analysts said that China's thirst for crude is likely to hold up in the coming months as domestic production continues to fall due to aging oil fields and budget cuts.

"China's own crude production is significantly less than what the country needs so the only way is through imports," said Gao Jian, an energy analyst at the Shandong-based SCI International.

China's crude output in the first half of the year was down 4.6% to 101.59 million tons, while crude runs rose 2.8% to 267.35 million tons.

Investors saw another encouraging sign from China on Friday, when the world's second largest economy posted a slightly better-than-expected second quarter gross domestic product numbers.

Market participants will also be eyeing the U.S., with the weekly rig count due later on Friday. Investors will be eager to see whether more rigs have been added for what would be the third consecutive week.

"Some U.S. drillers seem to be succeeding in streamlining production and expenses of extracting the crude oil and are able to produce at a cost of around $40 [a barrel] by cutting costs and improving efficiency," said Michael Poulsen, oil analyst at Global Risk Management.

Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 0.8% to $1.40 a gallon. ICE gasoil changed hands at $407.00 a metric ton, down $5.00 from the previous settlement.

Write to Sarah McFarlane at sarah.mcfarlane@wsj.com and Jenny W. Hsu at jenny.hsu@wsj.com

(END) Dow Jones Newswires

July 15, 2016 06:52 ET (10:52 GMT)