- U.S. crude oil steadied on Friday after deep losses in the previous session.
- U.S. crude stockpiles fell 3.6 million barrels last week, the EIA said, exceeding expectations for a decline of 525,000 barrels.
- Expectations of higher OPEC output have weighed on the market.
U.S. crude oil steadied on Friday after deep losses in the previous session on pressure from all-time high U.S. production and expectations of higher OPEC output.
U.S. West Texas Intermediate crude rose 2 cents to $67.06 a barrel by 0805 GMT after dropping almost 2 percent on Thursday. Brent crude, which was little changed in the previous session, added 17 cents, or 0.2 percent, to $77.73 per barrel.
U.S. crude production has been rising to record high levels since late last year. In March it jumped 215,000 bpd to 10.47 million bpd, a new monthly record, the Energy Information Administration (EIA) said on Thursday.
Still, U.S. crude stockpiles fell 3.6 million barrels last week, the EIA said, exceeding expectations for a decline of 525,000 barrels.
“A drop in inventories in the U.S. was overshadowed by U.S. output which jumped to a record high level,” ANZ said in a note.
“With the markets still concerned about supply-side issues in OPEC, this has pushed the Brent-WTI spread out to nearly $11/bbl, the highest level for three years.”
Brent hit a three-week low below $75 a barrel on Monday after OPEC and its allies, including Russia, indicated they could adjust their deal to curb supplies and increase production, but recovered later in the week.
OPEC and non-OPEC producers have committed to cut output by 1.8 million bpd until the end of 2018 but are ready to make gradual supply adjustments to deal with shortages, a Gulf source familiar with Saudi thinking told Reuters late on Wednesday.
Sources told Reuters last week that Saudi Arabia, the effective leader of OPEC, and Russia were discussing boosting output by about 1 million bpd to compensate for losses in supply from Venezuela and to address concerns about the impact of U.S. sanctions on Iranian output.
Russia would be able to raise its oil output back to pre-cut levels within months if there is a decision to unwind the price-protection deal with OPEC and other producers, a Russian energy ministry official said.
Concerns about U.S. bottlenecks are contributing to the decline in U.S.futures as well. Prices for physical barrels of U.S. light sweet crude delivered at Midland are at their largest discount to the benchmark U.S. futures price in almost four years.