Oil prices claw back losses, but oversupply still weighs

The stable prices came after a more-than-3.5 per cent fall in both benchmarks earlier this week as doubts emerged over the effect of an effort led by the Organisation of the Petroleum Exporting Countries (Opec) to cut production by nearly 1.8 million barrels per day (bpd) during the first half of the year.

Oil prices still declined on Friday, with Brent crude trading below $52 a barrel on concerns that increasing USA production and high inventories would thwart the efforts by OPEC and its allies to curb supplies.

Leading Gulf oil producers Saudi Arabia and Kuwait gave the clearest signal yet that OPEC plans to extend into the second half of the year a deal with non-OPEC producers to curb oil supplies. The May contract expired Thursday down 17 cents at US$50.27, the lowest close for front-month futures since April 3.

Crude futures edged lower on Friday, with investors focused on the USA, where production is growing faster than had been anticipated. The OPEC has already implemented its commitment while non-cartel countries have implemented over half of the agreed cuts.

The International Energy Agency said last week that the compliance with the agreement among OPEC members and some non-members, including Russian Federation, "has been impressive", giving a lift to oil prices.

Saudi Arabia's powerful oil minister Khalid-al-Falih has raised the hopes of an extension of the current production curb deal; when the OPEC ministers meet at their Vienna headquarter on May 23rd.


USA shale oil producers are planning to expand production following the rebound in prices.

US futures are now down in every session this week, shedding 7% since they hit a one-month high April 11.

OPEC and Russian Federation haven't reached a final agreement on extending output limits, Almarzooq said. Almost a dozen other countries including Russian Federation pledged in December to cut an additional 558,000 barrels a day.

Russia's Energy Minister Alexander Novak, however, declined to say whether the top oil producer would adhere to an extension before a joint meeting on May 25, saying global stocks were declining.

OPEC rhetoric has had little market impact with the main market focus still on risks posed by increased USA production and the high level of inventories. Crude now trades over $50 a barrel. S. producers will increase output anew, potentially sending stockpiles higher again. American exports ran in early April at a four-week average of 706,000 barrels a day, up almost 90 percent from the same time of past year, according to data from the U.S. Energy Information Administration. OPEC has "done all they can with the production cuts" he added, "and the effect is close to nonexistent".

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