17 March 2017, London — Oil prices rose on Friday, helped by a weaker dollar, as investors weighed the impact of OPEC production cuts against rising U.S. shale oil output and persistently high inventories.
Saudi Energy Minister Khalid al-Falih said on Thursday oil output cuts by the Organization of the Petroleum Exporting Countries and non-OPEC producers could be extended beyond June if oil stocks stayed above a long-term average.
But analysts said the comments gave limited support because Riyadh has said it needs cooperation to rebalance the market and non-OPEC producers, such as Russia, have yet to deliver fully on reduction commitments in the first half of 2017.
Brent crude was up 31 cents at $52.05 a barrel by 1102 GMT. U.S. light crude was up 33 cents at $49.08.
“The market remains relatively calm today with concerns about having to extend the production cut deal being offset by a weaker dollar,” said Saxo Bank head of commodity strategy Ole Hansen.
Oil prices, which lost ground earlier on Friday, have found some support from dollar weakness after the U.S. Federal Reserve indicated it would not accelerate plans for rate rises. The fall in the greenback boosted dollar-denominated crude.
Investors will also look for more direction from data due later on Friday. The Baker Hughes weekly rig count will indicate activity in the U.S. shale industry and the U.S. Commodity Futures Trading Commission releases calculations of net long and short positions in the crude futures market.
Oil prices fell sharply last week on concerns that OPEC-led production cuts were not reducing the global supply overhang as quickly as expected in the face of increased U.S. output.
OPEC and non-OPEC members reached an agreement last year to cut output by a combined 1.8 million barrels per day (b/d) in the first half of 2017.
But OPEC’s monthly report showed global oil inventories rose in January to 278 million barrels above the five-year average.
Investors took some comfort from a dip in U.S. stockpiles in the week to March 10, after nine weekly rises. However, the fall in U.S. inventories was a modest 237,000 barrels, leaving 528 million barrels in storage, close to record highs.
In a further sign that OPEC’s efforts have had little impact so far, oil shipments to Asia have increased 3 percent since the OPEC supply cut deal was made.
*Sabina Zawadzki, Jane Chung; Editing: Edmund Blair – Reuters