Oil is heading for the first weekly decline since the start of October after the International Energy Agency (IEA) trimmed demand estimates and as US crude production continued its record run.
Futures rose 0.4% in New York, trimming the weekly decline to 2.5%. This year’s price recovery along with milder-than-normal winter weather is putting a brake on demand growth, the IEA said Tuesday in its monthly report.
US crude output gained for a fourth week to the highest in more than three decades, according to government data on Wednesday.
Oil has eased after reaching a two-year high on signs the Organisation of Petroleum Exporting Countries (Opec) and its allies will extend supply cuts past the end of March. With all eyes on an Opec meeting later this month, the outcome of the gathering has become uncertain as Russia is said to be hesitant to commit to a decision so soon, while Saudi Arabia pushes for longer curbs.
"It’s certainly a good time for the market to pause and take stock considering the upcoming Opec meeting," said Daniel Hynes, an analyst at Australia & New Zealand Banking Group in Sydney.
"Murmurs about Russia’s reluctance to extend the deal has weakened sentiment. The agreement will be prolonged, the only question mark will be around the length of that extension."
West Texas Intermediate for December delivery was at $55.34 a barrel on the New York Mercantile Exchange, up 20 cents, at 2:45pm in Hong Kong.
Total volume traded was about 95% above 100-day average. Prices lost 19 cents to $55.14 on Thursday.
Brent for January settlement was 8 cents lower at $61.28 a barrel on the London-based ICE Futures Europe exchange.
Prices are down 3.5% this week, also heading for the first weekly drop since the start of October.
The global benchmark was at a premium of $5.76 to January WTI.
Opec is unlikely to reduce excess oil inventories to average levels by the time the current supply deal expires, Saudi Arabia’s Energy Minister Khalid Al-Falih said on Thursday, adding the agreement should be prolonged.
The kingdom has had extensive consultations with Russia, he said, and feels "fully convinced" that the country will be "fully on board" when a resolution is made.
Oil-market news:
The Energy Information Administration (IEA) reduced its demand estimate for 2018 by 200 000 barrels a day to 98.9 million a day, according to its monthly report. US crude output increased by 25 000 barrels a day to 9.65 million barrels a day, the Energy Information Administration said on Wednesday.
Iran’s crude oil production capacity will likely rise to 4.4 million barrels a day by 2022 to 2023, FGE chairperson Fereidun Fesharaki writes in note emailed on Friday.
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