Benchmark Brent crude futures settled down US$1.24 or 2.52 per cent at US$48.06 a barrel. US West Texas Intermediate (WTI) crude futures settled down US$1.15 or 2.45 per cent, at US$45.77 a barrel.
“This turn around late in the week is suggestive that the concerns that drove us to 42 are still driving us lower,” said Gene McGillian, manager of market research at Tradition Energy.
Both Brent and US crude posted weekly losses of more than 1.6 per cent after Petro-Logistics said Opec crude production would rise 145,000 barrels per day (bpd) this month. Petro-Logistics, which tracks Opec supply forecasts, said this would take the group’s combined output above 33 million bpd.
Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month’s gains, it said.
Opec and some non-Opec states, such as Russia, have been trying to cut production 1.8 million bpd through the end of March 2018.
On Monday several ministers from Opec and non-Opec member countries will meet in St Petersburg. Kuwaiti oil minister Essam al-Marzouq, whose country heads the joint ministerial committee, said attendees would discuss continuing the production cuts.
The committee can make recommendations to adjust the deal if needed, but analysts expressed skepticism that the group will address rising production from Nigeria and Libya, two Opec members exempted from the cuts.
“There’s no expectation… that there’s going to be anything of substance in that meeting,” said Dan Katzenberg, senior analyst at Baird and Co in New York.
US oil drillers cut one rig in the week to July 21, according to data from Baker Hughes. Analysts said the decline was likely a pause in a drilling recovery expected to continue through at least 2019.
Money managers raised their net long US crude futures and options positions in the week to July 18 by 36,267 contracts, the US Commodity Futures Trading Commission (CFTC) said.
The discount of US crude futures front-month versus the second-month briefly fell to just 12 cents per barrel during the trading session, the lowest since December 2014. This makes it less profitable for speculators to buy oil, sell it forward and store it in the meantime.