Oil steadied after a third weekly loss as predictions by Saudi Arabia and Russia that crude markets will re-balance vied with signs that U.S. companies are drilling even more wells.
Futures added 1.4 percent in New York after sliding 3.8 percent last week. Inventories are declining and reductions will accelerate in the next three to four months, Saudi Energy Minister Khalid Al-Falih said at a briefing in Kazakhstan with his Russian counterpart, Alexander Novak. Russia is committed to doing everything it can to balance the market, Novak said.
Oil is trading below $50 a barrel amid speculation increased U.S. supplies will counter production curbs by the Organization of Petroleum Exporting Countries and its allies, including non-member Russia. American drillers targeting crude added rigs for the 21st straight week, the longest run of gains in three decades, according to data Friday from Baker Hughes Inc.
“The bigger picture remains one of still-elevated inventory levels and only limited progress in drawing down excess stocks,” said David Martin, an analyst at JPMorgan Chase & Co. in London.
West Texas Intermediate for July delivery rose 62 cents to $46.45 a barrel on the New York Mercantile Exchange at 11:37 a.m. London time. Total volume traded was 21 percent above the 100-day average. Prices increased 19 cents to close at $45.83 on Friday, trimming the weekly decline to 3.8 percent.
Brent for August settlement climbed 60 cents to $48.75 a barrel on the London-based ICE Futures Europe exchange. Prices lost 3.6 percent last week. The global benchmark crude traded at a premium of $2.14 to August WTI.
Global crude inventories will settle at their five-year historical average — OPEC’s target — before the end of the year, Al-Falih said in Astana. Still, Saudi Arabia, the group’s biggest producer, may modify its policy if output cuts don’t have the desired effect, he said.
U.S. drillers increased the rig count by eight to 741, the highest level since April 2015, according to Baker Hughes. Qatar, the focus of a diplomatic dispute with Saudi Arabia, is committed to production cuts under the OPEC-led agreement, according to Qatari Energy Minister Mohammed Al Sada.