By Polina Ivanova
Oil climbs, but still set for first weekly fall in six
17 Nov 2017 - 17:50
By Polina Ivanova / Reuters
LONDON: Oil prices rose on Friday but were still on track for a week of losses due to concerns about oversupply, as signs of rising U.S. output were compounded by doubts that Russia would support an OPEC deal to extend curbs on production.
Benchmark Brent crude oil was up 66 cents at $62.04 a barrel by 1400 GMT, recovering some ground after five sessions of losses.
U.S. light crude hit a three-day high, rising more than $1 before easing back to $56.08, 94 cents up on the day.
“An end-of-week rebound is helping the energy complex claw back some of its recent losses though both crude markers are still on track for their first weekly decline in six,” oil brokerage PVM said on Friday.
A 5,000-barrel oil leak in South Dakota - that led TransCanada Corp to shut part of its Keystone pipeline system on Thursday - added to the bullish tone, PVM said.
But prices were still on track to fall between 2 and 3 percent since the end of last week, as fears of oversupply in the United States weighed.
Crude oil production in the U.S. hit a record of 9.65 million barrels per day (bpd) this month, meaning U.S. output has risen by almost 15 percent since mid-2016.
The International Energy Agency said on Thursday that the United States would account for 80 percent of the global increase in oil production over the next 10 years.
“Let’s assume that U.S. oil production continues its upward trajectory. They could very well be at 10 million bpd by the end of 2017,” said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.
Signs this week of rising output in the United States have dampened the impact of a deal restricting output agreed by the Organization of the Petroleum Exporting Countries (OPEC), Russia and several other producers.
Its curbs on oil output had propped up prices, taking Brent above $64 last week to highs not seen since 2015.
“Upside potential is being capped by oversupply concerns fuelled by the surge in U.S. crude production,” PVM said.
The agreement expires in March and was expected to be extended at OPEC’s next meeting on Nov. 30. But signs that Russian support for the deal may be wavering have injected uncertainty and undermined the recent rally.
U.S. investment bank Jefferies said Russian backing for formalising an extension appeared “questionable, even if only to defer the decision” to the first quarter of 2018.
(Additional reporting by Henning Gloystein; Editing by Edmund Blair and Adrian Croft)