Picture: ISTOCK
Picture: ISTOCK

New York — Oil prices fell slightly on Friday after the International Energy Agency said weak Opec compliance with production cuts was prolonging a rebalancing of the market despite strong demand growth.

Brent crude was down 11c at $51.79 a barrel at 3.53pm GMT, having earlier fallen 50c, or around 1%, to its lowest since August 1.

US West Texas Intermediate crude was down 15c at $48.44 per barrel, having earlier dropped 1% to its lowest since July 26.

US crude was on track to close more than 2.4% lower on the week, with Brent on track to close 1.8% lower.

Oil touched two-and-a-half-month highs on Thursday but closed down amid oversupply concerns.

The IEA said Opec’s compliance with the cuts in July had fallen to 75%, the lowest since those curbs began in January. It cited weak compliance by Algeria, Iraq and the United Arab Emirates.

In addition, Opec member Libya, which is exempt from the cuts, steeply increased output.

"Crude oil prices failed to hold recent gains, with a nervous market starting to doubt recent falls in inventories," ANZ bank said in a note. "Supply-side issues also weighed on prices." The IEA also said it had revised historic demand data for 2015-2016, meaning a lower demand base in 2017-2018 combined with unchanged high supply numbers could lead to lower stock draws than initially anticipated.

Saudi Arabian Energy Minister Khalid al-Falih said the kingdom did not rule out additional oil production cuts, but stressed that his country would not take any unilateral action, the Saudi-owned Al Sharq Al Awsat newspaper reported.

In the US, President Donald Trump again stepped up his rhetoric against North Korea again, saying what he called US military solutions were "locked and loaded" as Pyongyang accused him of driving the Korean peninsula to the brink of nuclear war.

"I think the issue that is affecting the market is the general risk sentiment of saber-rattling between Washington and Pyongyang," said Michael McCarthy, chief market strategist at CMC Markets.

On Friday, energy services company Baker Hughes releases its monthly rig count number. Last week, data showed US energy companies cut oil rigs for a second week in three, slowing the pace of a 15-month drilling recovery.

Baker Hughes releases its data at 6pm GMT.

"We’re watching to see if slowing of rig counts continues," said Mark Watkins, regional investment manager at US Bank, "That would be a positive sign ... that production might be topping in the US".

Reuters

Please login or register to comment.