Oil creeps up from 10-month low, down nearly 4 percent on week
Brent futures LCOc1 settled up 32 cents, or 0.7 percent, to $45.54 a barrel. U.S. West Texas Intermediate crude (WTI) CLc1 ended up 27 cents, or 0.6 percent, at $43.01 per barrel.
For the week, both benchmarks lost 3.9 percent, and oil currently sits just off 10-month lows, beset by ongoing worries about rising production. The five-week slide represents the longest stretch of weekly declines for the front-month contracts since August 2015.
Prices pared earlier gains after oil services firm Baker Hughes (BHI.N) showed U.S. drillers added 11 oil rigs this week, the biggest increase in three weeks.
“The higher rig count this week reflects decisions made a couple of months ago when oil prices were higher,” said James Williams, president of WTRG Economics in Arkansas. He said he expects the current low prices to cause the count to fall in some weeks over the next month or two.
The U.S. dollar .DXY was down 0.3 percent against a basket of currencies, on track for its biggest daily percentage decline since early June after weaker-than-expected U.S. economic data. This boosted greenback-denominated oil.
Still, oil prices remain down about 20 percent this year despite an effort led by the Organization of the Petroleum Exporting Countries to cut production 1.8 million barrels per day (bpd).
It puts the market on course for its biggest first-half percentage fall since the late 1990s, when rising output and the Asian financial crisis led to sharp losses.
“We doubt that demand growth will accelerate sufficiently to break the current downward price momentum,” analysts at Bank of America Merrill Lynch said in a note on Friday, citing surprisingly weak recent economic data in the United States, China and Asia.
OPEC-led efforts to reduce production and end the oil glut have been frustrated by soaring output from the United States and OPEC members Libya and Nigeria, which are exempt from the cuts.
Thanks to shale drillers, U.S. oil production C-OUT-T-EIA has risen more than 10 percent in the past year to 9.35 million bpd, close to the level of top exporter Saudi Arabia.
“Rising U.S. output continues to stress markets, with increasing evidence that improved efficiency and technology makes many of the shale plays profitable below $40 a barrel,” analysts at Cenkos Securities wrote. –Reuters