SINGAPORE (Reuters) – Oil traded steady on Friday, though it was set for its biggest weekly drop in about a month over doubts that an OPEC-led production cut will restore balance to a market that has been dogged by oversupply for more than two years.
Brent crude futures (LCOc1) were at $52.99 per barrel at 0323 GMT (11:23 p.m. EDT), flat from their last close. Brent futures are set for a 5.2 percent weekly drop, the most since the week of March 10.
U.S. West Texas Intermediate (WTI) crude futures (CLc1) were also almost unchanged, at $50.74 a barrel. WTI is set for a 4.6 percent weekly decline, also the most since March 10.
Reuters’ technical analyst Wang Tao said that WTI had support just above $50 per barrel, while Brent had support around $52.55.
The stable prices on Friday followed a more-than-3.5 percent fall in both benchmarks earlier this week as doubts emerged over the effect of an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production by almost 1.8 million barrels per day (bpd) during the first half of the year.
Thomson Reuters Eikon data shows that a record 48 million bpd of crude is being shipped across ocean waters in April, up 5.8 percent since December, before cuts were implemented.
The market is taking note: The value of the entire Brent forward curve <0#LCO:> has slumped steadily since the start of the OPEC-led cuts in January. The two-year calendar strip for Brent futures, or the average of all contracts over that period, is down by more than $4 since January to around $54.15 a barrel.
The high supplies are in part a result of other producers, who have not agreed to cut output, increasing exports.
“The resurgence of U.S shale continues to sabotage… efforts to stabilize the saturated markets,” said Lukman Otunuga of futures brokerage FXTM.
U.S. production has jumped almost 10 percent since mid-2016 to 9.25 million bpd , close to the world’s top two producers, Saudi Arabia and Russia.
The chief executive of France’s oil major Total (PA:TOTF) warned this week that prices could fall further due to rising U.S. production.
Attempting to prevent a further ballooning in supplies, some OPEC producers including Saudi Arabia and Kuwait are lobbying to extend the pledge to cut production beyond June.
To determine the health of oil markets, analysts say it is important to monitor inventory levels.
Yet outside the United States, where data still shows bloated inventories , reliable information is difficult to come by.
There are signs that inventories around Asia’s oil trading hub of Singapore have fallen, although it is not clear whether this is to meet strong demand, or if this is to make space in anticipation of more supplies coming.
(To view a graphic on oil supplies and crude price curve, click http://tmsnrt.rs/2pElIP6)
