Monday, May 8th, 2017

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Oil futures settled higher on Friday, but still registered a hefty loss for the week

Crude Oil Futures Weekly Outlook: May 8 – 12

by: Investing.com

Oil futures settled higher on Friday, but still registered a hefty loss for the week as signs of rising U.S. shale production continued to feed concerns about a global supply glut.

The U.S. West Texas Intermediate crude June contract tacked on 70 cents, or around 1.5%, to end at $46.22 a barrel by close of trade Friday. It plunged almost 5% on Thursday after hitting its lowest since November 14 at $43.76.

The U.S. benchmark lost $3.11, or almost 6.3%, on the week, the third straight weekly decline, marking the longest losing streak since November.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for July delivery ticked up 72 cents to settle at $49.10 a barrel by close of trade. The global benchmark sank to $46.64 a day earlier, a level not seen since November 15.

For the week, London-traded Brent futures recorded a loss of $2.95, or nearly 5.7%.

Crude has been under pressure in recent weeks amid fears that an ongoing rebound in U.S. shale production is derailing efforts by other major producers to rebalance global oil supply and demand.

U.S. drillers last week added rigs for the 16th week in a row, data from energy services company Baker Hughes showed on Friday, implying that further gains in domestic production are ahead.

The U.S. rig count rose by 6 to 703, extending an 11-month drilling recovery to the highest level since August 2015.

The relentless increase in U.S. output has overshadowed pledged output cuts by major producers.

In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels.

Saudi Arabia’s OPEC Governor Adeeb Al-Aama said on Friday there is an emerging consensus among OPEC and non-OPEC countries who took part in a global pact to cut crude output on the need to extend the agreement beyond June to help clear a supply glut.

A final decision on whether or not to extend the deal beyond June will be taken by the oil cartel on May 25.

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