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Crude oil prices firm, set for biggest weekly gain since mid-May
June 30, 2017 / 12:50 AM / in 4 months

Crude oil prices firm, set for biggest weekly gain since mid-May

SINGAPORE, June 30 (Reuters) - Crude oil futures on Friday were on track for their biggest weekly gain since mid-May, ending five weeks of losses with prices underpinned by a decline in U.S. output.

U.S. crude futures have added 4.6 percent this week, while benchmark Brent has gained 4.2 percent. That marks the biggest rise for both markets since the week ending May 19.

U.S. crude was trading up 0.2 percent, or 8 cents, at $45.01 a barrel at 0024 GMT on Friday, with Brent climbing 0.2 percent, or 7 cents, to $47.49 a barrel.

Crude prices hit a 10-month low last week in the face of a mounting supply glut, but data indicating a fall in U.S. production has bolstered markets this week.

U.S. crude output dropped 100,000 barrels per day (bpd) to 9.3 million bpd last week, the steepest weekly fall since July 2016.

Meanwhile, the North Sea crude oil market is finally showing signs of long-lost strength, suggesting that some of the pessimism that has driven down oil futures this month and created a record bet against a price rise may be unjustified.

On Thursday, about 6 million barrels of North Sea Brent crude were being stored on ships, down from four-month highs of as many as 9 million last week, and trading sources said it seemed now refineries were starting to take in more cargoes.

In recent weeks, funds have been unloading long speculative positions, reducing bets on higher prices, while brokerages including Goldman Sachs and Societe Generale have cut their 2017 forecasts for crude prices.

SocGen on Thursday estimated U.S. crude futures would average $47.50 a barrel in the third quarter, down from previous expectations for $55.

Global oil supplies remain ample despite output cuts of 1.8 million bpd by the Organization of the Petroleum Exporting Countries and other producers since January.

“The market’s calls for further cuts from OPEC continue to be rejected by the oil group,” ANZ said in a note.

“UAE Energy Minister Suhail Al Mazrouei was the latest minister to suggest there are no plans or talks on further curbs. This follows on from comments from Russia that such a topic is not on the table.”

OPEC has exempted Nigeria and Libya from the curbs, leaving them free to ramp up output that had been sapped by local unrest.

Libyan oil production is nearing 1 million bpd, a Libyan source with direct knowledge of the matter told Reuters. (Reporting by Naveen Thukral; Editing by Joseph Radford)

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