Oil’s rebound on Friday ran out of steam as investors focus on all the production that OPEC can do nothing about.
Futures were little changed in New York as they capped the first weekly gain in a month.
OPEC boosted estimates for growth in rival supplies by 64 percent, as producers in the US shale patch, Brazil and elsewhere keep boosting production.
Photo: Reuters
“Prices have come up quite a bit this week and it looks like the market just ran out of steam,” Kyle Cooper, director of research with IAF Advisors in Houston, Texas, said by telephone. “There’s concern about rising non-OPEC supply and whether they will stick to their guns when they meet later this month. They will need to, because of rising US production.”
Oil this week rebounded somewhat after the biggest decline in US crude inventories since December last year helped allay concerns that OPEC will not be able to ease a supply glut.
However, the US benchmark is still down 11 percent for the year after a rout last week dragged prices back to where they were before OPEC’s deal at the end of November last year.
OPEC ministers are to meet on May 25 to decide whether to go forward with an extension of their production cuts.
West Texas Intermediate (WTI) for June delivery advanced US$0.01 to US$47.84 per barrel on the New York Mercantile Exchange. It was the highest close since May 1.
Total volume traded was about 3 percent below the 100-day average. Prices rose 3.5 percent this week.
Brent for July settlement rose US$0.07 to US$50.84 per barrel on the London-based ICE Futures Europe exchange. Prices increased 3.5 percent this week.
The global benchmark crude closed at a US$2.67 premium to July WTI.
US supplies last week declined by 5.25 million barrels to 522.5 million, Energy Information Administration data showed on Wednesday.
While that is down from a record 535.5 million barrels at the end of March, output rose for a 12th week to 9.3 million barrels per day, the highest since August 2015.
OPEC and its allies support extending the curbs for a further six months, Iraqi Minister of Oil Jabbar al-Luaibi and Algerian Minister of Energy Noureddine Boutarfa said on Thursday in Baghdad.
The two biggest producers participating in the curbs, OPEC’s Saudi Arabia and non-member Russia, on Monday signaled willingness to prolong the deal.
Oil market news:
‧ US drillers have dramatically reduced their hedging activity, a move that could portend a break in the production gains that have upended global crude prices.
‧ Saudi Arabia and Equatorial Guinea agree on extending oil output reduction deal for at least six months. Saudi Arabia also supports Equatorial Guinea in joining OPEC, according to Saudi Press Agency.
‧ In OPEC’s battle to revive the global oil market, the group and its allies are digging in for a long war of attrition against shale. US output would be approaching 9.5 million barrels per day by the time OPEC meets in Vienna later this month.
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