Oil prices choppy, heading for weekly decline

Oil prices rose slightly in seesaw trading on Friday. Apache photo.

Oil prices little changed in Friday trading

Oil prices remained steady in choppy trading on Friday on investors’ concerns about the possible extension of the OPEC supply cuts and the effectiveness of the cartel’s pact on global oil supply.

US light crude was up by 19 cents to $49.16/barrel by 1:08 p.m. EDT, lower than the day’s high of $49.76.  Brent crude futures were up 16 cents to $51.60/barrel.

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According to Reuters, both benchmarks are headed for weekly and monthly losses.

In the last 11 sessions, US oil prices have fallen.  On Thursday, prices took a drop after Libya announced the two oilfields shut down because of pipeline protests had resumed production.

Russia said it will meet its output reduction target for the end of April, cutting 300,000 b/d, which buoyed crude prices.

While most analysts believe the OPEC supply cut will be extended, many are concerned the jump in US shale production could reduce the efficacy of the OPEC deal.

US crude is down 0.8 per cent on the week and 2.7 per cent in April while Brent is down 0.6 per cent this week and 2.2 per cent this month.

In February, US crude producers boosted production by 193,000 b/d to 9.03 million b/d.  Weekly figures show production reaching levels not seen since August of 2015.

“We’ve seen pretty meaningful room to ramp up production,” Rob Haworth, senior investment strategist at US Bank Wealth Management told Reuters. He added shale producers have “been well able to hedge out price risk for further production.”

Also on Friday, Baker Hughes reported the US rig count rose again for the 15th straight week by nine to 697.

Analysts participating in a Reuters poll expect oil supply and demand to balance by the end of 2017, if producing countries extend the output cut. Most analysts cut their average yearly price forecasts.  Brent is expected to average $57.04/barrel, compared to last month’s forecast of $57.25.