Oil set for first weekly gain this month

Oil headed for the first weekly advance this month after US crude stockpiles eased from a record and as Saudi Arabia signalled an Organisation of Petroleum Exporting Countries (Opec) Opec-led deal to cut supply may be extended.

Futures were little changed in New York, up 0.4% for the week. US inventories last week fell for the first time this year, according to Energy Information Administration data on Wednesday.  

Output curbs by Opec and its partners may continue past June if global stockpiles remain above the five-year average, according to Saudi Arabia’s Energy Minister Khalid Al-Falih.

Oil last week broke below $50 a barrel for the first time since December as raising US output countered production curbs by Opec members and other nations. While markets are still struggling to clear a surge in supply from Opec at the end of 2016, compliance to the cuts remain above 90%, the International Energy Agency said.

"US stockpiles will be a headwind for the market until there is a consistent downtrend," said David Lennox, a resource analyst at Fat Prophets in Sydney.

"Cuts are unlikely to be extended if US production remains above 9 million barrels a day.I can’t see Opec boosting the price for American companies."

West Texas Intermediate for April delivery was at $48.69 a barrel on the New York Mercantile Exchange, down 6 cents, at 7:58 in London. Total volume traded was about 51% below the 100-day average.

Prices fell 11 cents to $48.75 on Thursday after surging 2.4 percent the previous session.

US stockpiles

Brent for May settlement lost 11 cents to $51.63 a barrel on the London-based ICE Futures Europe exchange. The contract on Thursday fell 7 cents to $51.74. The global benchmark crude traded at a premium of $2.44 to May WTI.

US crude inventories dropped by 237 000 barrels last week to 528.2 million barrels, according to the EIA. Stockpiles remain near the highest level in more than three decades.

Oil production expanded for a fourth week to 9.1 million barrels a day, the most since February 2016.

Oil-market news:

The Opec-led cuts are moving global markets in the "right direction" and fundamentals have improved considerably, Al-Falih said in a Bloomberg interview in Washington.

BP is in talks with Ineos to sell the Forties pipeline, one of the most-important pieces of oil infrastructure in the UK’s North Sea.