Oil on track for biggest weekly decline in a month
London — Oil prices edged lower on Friday, on course for the biggest weekly drop in a month, over doubt that an Opec-led production cut will restore balance to an oversupplied market.
Front-month Brent futures were at $52.87 a barrel at 8.20am GMT, down 12c from their last close and set for a 5.4% weekly drop, the most since the week of March 10.
Front-month US crude futures, which rolled over on Friday, were at $50.61 a barrel, down 10c and on course for a 4.8% weekly decline, also the most since March 10.
Saudi Arabia and Kuwait, key members of oil cartel Opec, favour extending their production-limiting deal with nonmember producers into the second half of the year.
Russian 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.
"The situation is gradually improving from the beginning of March," Novak said.
Both oil benchmarks fell this week as doubts emerged over the effect of the Opec/non-Opec production cut by almost 1.8-million barrels a day during the first half of 2017.
Thomson Reuters Eikon data show that a record 48-million barrels a day of crude is being shipped across ocean waters in April, up 5.8% since December.
The market is taking note: The value of the Brent forward curve has slumped steadily since the start of the Opec-led cuts in January. The two-year calendar strip for Brent futures, or the average value of all contracts over that period, is down more than $4 since January at about $54.10 a barrel.
Some producers that are not involved in the supply-curbing pact have increased exports.
"The resurgence of US shale continues to sabotage ... efforts to stabilise the saturated markets," said Lukman Otunuga of futures brokerage FXTM.
US output has jumped almost 10% since mid-2016 to 9.25-million barrels a day, close to that of the world’s top two producers, Saudi Arabia and Russia.
The CE of France’s Total warned this week that prices could fall further due to rising US production.
"The cut, even if it’s extended, is not going to make much difference," said Sukrit Vijayakar, director of energy consultancy Trifecta.
He pointed to elevated crude stocks as the main reason for oversupply.