Oil prices edged up on Friday from 2017 lows as some producers cut back on exports, but the market was poised for a fourth week of losses as OPEC-led production cuts failed to allay concerns over global oversupply.
Oil prices hit six-month lows on Thursday and have tumbled more than 12 per cent from late May when producers led by the Organization of the Petroleum Exporting Countries extended a pledge to cut output by 1.8 million barrels per day (bpd) for six months by another nine more months.
Brent crude futures rose 31 cents to $47.23 per barrel by 10:57 a.m. EDT and U.S. West Texas Intermediate (WTI) crude was at $44.63 per barrel, up 17 cents.
“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.
Non-OPEC member Russia is expected to export 61.2 million tonnes of oil via pipeline 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.
Kazakhstan, which agreed to cut supplies last year as part of the non-OPEC bloc, said it would reduce production in June and July after overproducing for three months in a row.
But OPEC members Nigeria and Libya, which are exempt from the deal, have increased exports as they bounce back from supply disruptions caused by protests, rebel activity and mismanagement.
In latest sign of crude glut, aging supertankers are being used to store unsold oil off Singapore and Malaysia.
Rising U.S. crude output has also undermined the impact of OPEC-led cuts, as production has risen more than 10 per cent in the past year.
Data from the U.S. Energy Information Administration (EIA) this week showing growing gasoline stocks and shaky demand, despite the peak summer driving season, sent prices tumbling.
The market will look to this week’s U.S. drilling rig count data due at 1 p.m. as an indication of future production. Drillers have added rigs for 21 consecutive weeks as part of a year-long recovery in returning to the well pad after prices pulled back from a two-year rout to above $50.
However, the pace of additions have slowed and lower oil prices are set to test U.S. shale drillers.
Eight prominent hedge funds have reduced the size of their positions in ten of the top shale firms in the Permian, the largest U.S. oilfield, by over $400-million, concerned that producers are pumping oil so fast they will undo the nascent recovery in the industry.
“Oil is unlikely to find solace into the weekend either, with ... 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.Report Typo/Error