Oil prices edged up from 2017 lows on Friday but an ongoing supply excess put them on track for their fourth consecutive week of losses despite OPEC-led production cuts to support the crude market.
Brent crude futures were up 42 cents at $47.34 per barrel by 0755 GMT. US West Texas Intermediate (WTI) crude futures were at $44.74 per barrel, up 28 cents.
“The market took a breather yesterday and is trying to recover somewhat this morning. It is by no means bullish,” said Tamas Varga, analyst at brokerage PVM Oil Associates.
Both benchmarks remained roughly 13 per cent below where they stood in late May, when producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended a pledge to cut production by 1.8 million barrels per day (bpd) by an extra nine months until the end of the first quarter of 2018.
Rising US oil output has undermined the impact of OPEC-led cuts. Data from the US Energy Information Administration (EIA) this week showing growing gasoline stocks and shaky demand, despite the peak summer driving season, sent prices tumbling.
“It's going to be difficult to have a rally unless there's a disruption or some news from OPEC,” said Olivier Jakob, managing director with PetroMatrix.
Recovering production from Libya and Nigeria, both of which were exempt from OPEC cuts, and high exports and production from Russia were also contributing to the ongoing glut.
Top producer Russia, not an OPEC member but which signed up to the deal to cut output, is expected to export 61.2 million tonnes of oil via pipelines in the third quarter, equivalent to about 5 million bpd, against 60.5 million tonnes in the second quarter, according to industry sources and Reuters calculations.
Add in Russia's tanker shipments and its total exports are likely to be more than 9 million bpd.
In the United States, which is not participating in any deal to reduce production, oil output has risen more than 10 per cent in the past year to 9.3 million bpd. The EIA expects that to rise above 10 million bpd in 2018.
US rig counts due later in the day on Friday could add further downward pressure.
“Oil is unlikely to find solace into the weekend either, with tonight's Baker Hughes Rig Count expected to deliver its now weekly increase of operational rigs,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.