Oil climbed further above $52 a barrel on Friday, supported by a drop in US fuel inventories, though gains were kept in check by ample crude supplies even as OPEC plans to cut output.
Brent crude reached a 2016 high near $54 on Monday, underpinned by OPEC September 28 deal to reduce oil production, before weakening on rising US crude stocks and as the Organisation of the Petroleum Exporting Countries’ own numbers showed output is still rising.
Global benchmark Brent rose 39 cents to $52.42 by 0859 GMT, with US crude up 57 cents at $51.01. US inventories of distillates, which include diesel and heating oil, fell by 3.7mn barrels, the government’s weekly supply report said on Thursday. Gasoline stocks fell by 1.9mn barrels.
“The end result was slightly positive,” Stephen Brennock, of broker PVM, said in a report, referring to Thursday’s US supply data. The rise in crude stocks was “more than offset” by lower fuel inventories, he said.
Stocks at the Cushing delivery hub for US crude also declined, but crude inventories overall rose by 4.9mn barrels, the first increase in six weeks. US crude’s structure gained support from the extended outage of a pipeline capable of delivering 450,000 barrels per day of crude into Cushing, traders said.
Opec’s plan is to cut its supply to between 32.5mn barrels per day (bpd) and 33mn bpd to help to balance supply and demand and revive prices that remain less than half of the levels reached in mid-2014.
However, a lack of much detail in the initial agreement, such as how much each of the 14 members can pump and the scale of any contributions from non-Opec countries such as Russia, has left analysts sceptical.
“We are doubtful that Opec’s efforts, even if successful in achieving a targeted 32.5mn bpd in collective output, will prove sufficient to materially alter the global oil balance and deliver a substantial reduction in oil inventories,” BNP Paribas said in a report.
Opec’s own monthly report on Wednesday put production at 33.39mn bpd in September.