Oil held above $61 a barrel, paring the weekly loss, as investors weighed surging U.S. crude production against a warning from the International Energy Agency of an impending shortfall in global supplies.
Futures in New York rose slightly Friday but headed for a weekly drop of 1.1 percent. While U.S. crude production jumped to 10.4 million barrels a day last week, according to government data, the dire situation in Venezuela’s energy sector may exacerbate a worldwide supply deficit expected later this year, the Paris-based IEA said.
Oil has been trading in a tight range this month, with prices hovering around $60 a barrel as rising U.S. output continues to stoke fears that a shale boom will limit price increases. Still, the Organization of Petroleum Exporting Countries and allied producers are continuing production cuts in an effort to drain a global glut and help prop up prices. A robust global economy has also led banks including Goldman Sachs Group Inc. to project strong demand for oil this year.
“The market is probably less concerned about the rise in U.S. oil production because the global economy is doing quite well, so there is demand for the additional oil,” said Jens Pedersen, senior analyst at Danske Bank A/S. “It seems like oil has found its feet following a volatile start to the year.”
West Texas Intermediate for April delivery traded up 16 cents at $61.35 a barrel on the New York Mercantile Exchange at 10:56 a.m. London time. The contract is down 69 cents this week. Total volume traded was about 54 percent below the 100-day average.
Brent for May settlement rose 6 cents to $65.18 a barrel on the London-based ICE Futures Europe exchange. The contract is down 0.5 percent this week. The global benchmark traded at a $3.77 premium to WTI for the same month.
The IEA raised its estimate for global oil demand growth by 90,000 barrels a day to 1.5 million a day in 2018 as a stronger outlook for developed economies offsets weakening expectations for emerging nations. Steady growth was also reflected in the American Petroleum Institute’s latest report showing U.S. oil consumption rose to the highest in 11 years even as crude production hit a new monthly record.
As a result of a worsening economic crisis in Venezuela, where output has fallen to the lowest since the 1940s, the market could tip from a glut into a shortage, the IEA said. OPEC is collectively cutting supply by almost 50 percent more than it intended, the agency said.
Other oil-market news:
Vitol Group named Russell Hardy as chief executive officer, replacing Ian Taylor at the helm of the world’s biggest independent oil trader. President Donald Trump’s decision to fire his top diplomat has put the Iran nuclear agreement at risk and has thrown into confusion an upcoming meeting of the accord’s signatories. Saudi Aramco is said to get cool response on IPO from U.S. investors.
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