Oil traded below $45 a barrel following a fourth weekly loss as US drillers continued to add rigs, blunting OPEC-led efforts to rebalance an oversupplied market.
Futures fell as much as 0.7 percent in New York after capping the longest run of weekly declines since August 2015. US drillers targeting crude added rigs for a 22nd straight week, the longest stretch in three decades, according to data on Friday from Baker Hughes Inc.
Oil slumped to the lowest close in seven months on Thursday amid concerns that rising US supplies will offset output cuts by the Organization of Petroleum Exporting Countries and allies including Russia. OPEC and its partners have curtailed production in an attempt to reduce bloated oil stockpiles to the five-year average, but increasing numbers of rigs in America, as well as rising output in Libya, is putting that target in jeopardy.
“The number of oil rigs continued to rise last week and the market needs to see at what oil price will we not have further rig activation in the US,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. “There seems to be very low conviction in the market that there really will be any inventory drawdown in the second half of the year.”
West Texas Intermediate for July delivery, which expires on Tuesday, was at $44.47 a barrel on the New York Mercantile Exchange, down 27 cents, at 9:18 a.m. London time. Total volume traded was about 31 percent below the 100-day average. The contract gained 28 cents to $44.74 on Friday.
Brent for August settlement slid 28 cents to $47.09 a barrel on the London-based ICE Futures Europe exchange, after dropping 1.6 percent last week. The global benchmark crude traded at a premium of $2.40 to August WTI.
US drillers increased the rig count by six to 747 last week, the highest level since April 2015, according to Baker Hughes. American crude production has expanded to 9.33 million barrels a day, Energy Information Administration data show.
Supply cuts need more time to have an impact on the market, the U.A.E.’s Al Mazrouei told reporters in Dubai. Saudi Energy Minister Khalid Al-Falih made a similar comment in Saudi newspaper Asharq al-Awsat. Libya’s Sharara oil field is pumping about 270,000 barrels a day, state-run National Oil Co. said.
The country, exempt from the OPEC deal, plans to boost production to the highest level since 2013 by the end of July. Kazakh Energy Minister Kanat Bozumbayev said his country agreed to the extension of the production-cut agreement because it’s counting on the deal to boost prices. There’s significant downside to US oil-supply projections for 2017 and next year if prices remain at about $45 a barrel, according to industry consultants FGE.