LONDON: Oil prices edged up from 2017 lows on Friday but remained on track for a fourth consecutive week of losses because of excess supplies, despite OPEC-led production cuts.
Brent crude futures were up 57 cents at US$47.49 per barrel by 1224 GMT. U.S. West Texas Intermediate (WTI) crude futures were at US$44.85 per barrel, up 39 cents.
“The market took a breather yesterday and is trying to recover somewhat this morning. It is by no means bullish,” said Tamas Varga, analyst at brokerage PVM Oil Associates.
Oil prices are more than 12% below where they were in late May, when producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended for nine months a pledge to cut output by 1.8 million barrels per day (bpd). The cuts had been due to end this month and will now run till March.
Rising US oil output has undermined the impact of OPEC-led cuts. Data from the US Energy Information Administration (EIA) this week showing growing gasoline stocks and shaky demand, despite the peak summer driving season, sent prices tumbling.
“It’s going to be difficult to have a rally unless there’s a disruption or some news from OPEC,” said Olivier Jakob, managing director with PetroMatrix.
Recovering production from Libya and Nigeria, both of which were exempt from OPEC cuts, and high exports and production from Russia were also contributing to the glut. An excess is already building on ships in Asia.
Top producer Russia, not an OPEC member but which signed up to the cuts, is expected to export 61.2 million tonnes of oil via pipelines in the third quarter, equivalent to about 5 million bpd, against 60.5 million tonnes in the second quarter, according to industry sources and Reuters calculations.
In the United States, which is not participating in the deal to reduce production, oil output has risen more than 10% in the past year to 9.3 million bpd. The EIA expects that to rise above 10 million bpd in 2018.
US drilling rig counts due later in the day on Friday could add further pressure, if it shows more were added.
“Oil is unlikely to find solace into the weekend either, with tonight’s Baker Hughes Rig Count expected to deliver its now weekly increase of operational rigs,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.