Hong Oil is heading for a fifth weekly decline after sinking into a bear market amid concerns rising supply from the US to Libya would offset production cuts from Organisation of Petroleum Exporting Countries (Opec) and its allies.
Front-month futures gained 12 cents in New York, yet were down 4.2% for the week. US crude production has extended gains above 9.3 million barrels a day, Libya is pumping the most in four years and oil stored in tankers rose to a 2017 high earlier this month.
A committee tasked with monitoring compliance to the Opec-led deal gave only cursory attention to the possibility of deepening the existing curbs, according to delegates familiar with the meeting this week.
Oil in New York and London tumbled into a bear market this week on concerns that expanding global supply will counter reductions from Opec and its partners including Russia.
Rigs drilling for oil in the US are at their highest since April 2015, according to data from Baker Hughes. The latest weekly data will be released at 1pm New York time.
"The futures curve may have reached a point when it no longer makes sense for US drillers to add rigs," said Bjarne Schieldrop, chief analyst, commodities at SEB Markets.
"The revival in Libya oil production, the fact that Opec and non Opec are relatively quiet when it comes to implementing deeper cuts have been ammunition for the bears."
West Texas Intermediate for August delivery was at $42.86 a barrel on the New York Mercantile Exchange at 10:43 in London. Total volume traded was about 24% below the 100-day average.
Prices rose 21 cents to $42.74 on Thursday after falling 4.9% the previous three sessions.
Brent for August settlement was at $45.34 a barrel on the London-based ICE Futures Europe exchange, up 12 cents. The contract gained 40 cents to $45.22 on Thursday. Prices are down 4.3% this week. The global benchmark crude traded at a premium of $2.46 to WTI.
US oil production rose by 20 000 barrels a day last week to 9.35 million, the Energy Information Administration reported on Wednesday. While crude stockpiles slid by 2.45 million barrels to 509.1 million, a steeper decline than forecast in a Bloomberg survey, inventories remain about 100 million barrels above the five-year average.
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