Oil slumped, posting a weekly loss as a decline in US crude stockpiles was offset by drillers resuming a year-long expansion that is raising production.
Futures fell 3.9 percent this week, even after US data on Thursday showed the nation’s crude stockpiles dropped by 6.3 million barrels, three times as much as expected.
US drillers went back to adding rigs this week, after breaking a record streak of expansion last week.
Investors remain doubtful that OPEC-led production cuts will clear a global glut as Russia and Saudi Arabia appear to be less committed than earlier in the year, while US production has been rising for most of this year.
“The market remains unconvinced because the fundamentals remain unconvincing,” said Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle, which oversees US$142 billion of assets. “Excess supply is still what’s controlling market prices.”
Oil’s longest rally this year faltered this week after Russia was said to oppose deeper supply cuts by OPEC and its partners.
Saudi Arabian production last month increased by the most in almost a year, according to a Bloomberg survey.
The oversupply concerns have kept futures below US$50 per barrel for the past six weeks.
“Oil remains volatile, unable to hold onto gains even after strong inventory draws in the US,” said Jan Edelmann, an analyst at HSH Nordbank AG in Hamburg. “While the strong draws are a step in the right direction, multiple weeks of the same are now needed for the rebalancing.”
West Texas Intermediate (WTI) for August delivery on Friday lost as much as US$1.74 to US$43.78 per barrel on the New York Mercantile Exchange and settled US$1.29 lower at US$44.23. The contract is down 4 percent from last week’s US$46.04 per barrel.
Brent for September settlement closed US$1.40 lower at US$46.71 per barrel on the London-based ICE Futures Europe exchange. Prices are down 2.5 percent this week. The global benchmark traded at a premium of US$2.32 to September WTI.
US crude production last week increased by 88,000 barrels per day to 9.34 million, the US Energy Information Administration said in a report on Thursday. Output had slid by 100,000 barrels per day through June 23 because of field maintenance in Alaska and the impact of tropical storm Cindy. Gasoline stockpiles fell by 3.7 million barrels.
Russia wants to stick to the OPEC deal and would oppose any proposal for deeper production cuts at the group’s ministerial meeting later this month, four Russian government officials said this week.
Russia remains willing to weigh any proposals from its allies at the summit in St Petersburg, the Russian Ministry of Energy said in a statement on Friday.
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