Oil traded below $45 a barrel after a fourth weekly loss on speculation that a record expansion by U.S. drillers will blunt OPEC-led efforts to rebalance an oversupplied market.
Futures fell 0.4 percent in New York after capping the longest run of weekly declines since August 2015. U.S. drillers targeting crude added rigs for a 22nd straight week, the longest stretch in three decades, according to data Friday from Baker Hughes Inc. Demand will rise during the third quarter, according to Suhail Mohammed Al Mazrouei, energy minister for the United Arab Emirates.
Oil slumped to the lowest close in seven months last week amid concerns that rising U.S. supplies will offset output cuts by the Organization of Petroleum Exporting Countries and allies including Russia. Libya, exempt from the OPEC-led deal, will boost production to the highest level since 2013 by the end of July, according to the country’s National Oil Co.
“The risk is to the downside at this stage, although prices may not fall too much further,” said Ric Spooner, an analyst at CMC Markets in Sydney. “Any more disappointing news on U.S. inventories this week will send oil lower.”
West Texas Intermediate for July delivery, which expires Tuesday, was at $44.57 a barrel on the New York Mercantile Exchange, down 17 cents, at 1:13 p.m. in Hong Kong. Total volume traded was about 31 percent below the 100-day average. The contract gained 28 cents to close at $44.74 on Friday, trimming the weekly loss to 2.4 percent.
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Brent for August settlement slid 15 cents to $47.22 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 1.6 percent last week. The global benchmark crude traded at a premium of $2.42 to August WTI.
U.S. drillers increased the rig count by six to 747, the highest level since April 2015, according to Baker Hughes. American crude production has expanded to 9.33 million barrels a day, Energy Information Administration data shows.
Supply cuts need more time to have impact on the market, U.A.E.’s Al Mazrouei told reporters in Dubai. There is significant downside to U.S. oil supply projections for 2017 and next year if prices remain at about $45 a barrel, according to industry consultant FGE.