US oil production at highest since August 2015
Oil prices recouped earlier losses on Friday but remained on track for a weekly decline, weighed down by rising OPEC exports and strong output from the United States.
Brent crude futures, the international benchmark, were trading at $52.06 a barrel at 13.14 GMT, 5 cents above the last close and heading for a fall of just under 1% on the week.
U.S. West Texas Intermediate (WTI) crude futures were up 5 cents at $49.08 per barrel but set to end the week more than 1% lower.
Earlier in the day, both contracts traded more than 50 cents lower. Analysts said prices were pressured by rising output, although strong demand limited the losses.
“Increasing OPEC production and increasing OPEC exports are the reason the market has been trading lower,” PVM Oil Associates analyst Tamas Varga said.
Barclays bank said: “we expect a downward (price) correction during this quarter”, but forecast Brent at an average of $54 per barrel during the fourth quarter.
While the Organization of the Petroleum Exporting Countries is leading cuts of 1.8 million barrels per day (bpd) along with some non-members such as Russia, its July exports hit a record high, according to a report by Thomson Reuters Oil Research.
July’s exports at 26.11 million bpd represented a rise of 370,000 bpd, with most coming from Nigeria.
A Reuters survey also showed OPEC oil output at 2017 highs in July, led by Libyan gains. Libya and Nigeria were exempt from OPEC’s output deal.
Output in Russia is also high. Russia’s largest oil producer, Rosneft, said its crude production grew by 11.1% year-on-year in the second quarter.
U.S. oil production hit 9.43 million bpd, the highest since August 2015 and up 12% from its most recent low in June last year. Still, US crude exports in June fell to 786,000 bpd, compared with just over 1 million bpd in May, data showed on Friday.
Prices were still more than 16% above the lows hit in June, as strong summer demand for transport fuel has buoyed benchmark contracts.
U.S. gasoline demand rose to a record 9.842 million bpd last week, according to government data this week.
“Gasoline demand is now +0.1% (year-on-year). This is reasonably encouraging given it had been flat or negative since late November 2016,” US investment bank Jefferies said.