Oil prices moved higher on Friday, with U.S. crude on track for weekly gains of 1%, as investors looked ahead to further data on U.S. drilling activity later in the session and waited for a gathering of oil producers at the beginning of next week.
The U.S. West Texas Intermediate crude September contract gained 14 cents, or 0.30 %, to $47.06 a barrel by 4:43AM ET (8:43GMT).
Elsewhere, Brent oil for September delivery on the ICE Futures Exchange in London rose 18 cents, or 0.47%, to $49.38 a barrel.
Despite this week’s gains, oil has tumbled more than 10% year-to-date as skepticism over the capability to reduce the global supply cut caused investors to sell off black gold.
The Organization of Petroleum Exporting Countries (OPEC) agreed with non-OPEC members led by Russia to cut production by 1.8 million barrels per day through March 2018 though the latest reading on compliance by OPEC members was at just 78%.
Furthermore, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, and a relentless increase in U.S. shale oil output.
Earlier this week, tiny producer Ecuador signaled it might not abide by the cuts, causing fears that other larger producers might follow suit.
OPEC and non-OPEC producers are scheduled to meet Monday in Russia and traders are watching for any signs that Saudi Arabia, the largest producers of crude in the world, may cut its output.
There is speculation that Saudi Arabia is considering a 1 million-barrel cut to its oil exports to offset the output rise in Libya and Nigeria.
Kuwait’s oil minister has also reportedly said that the two African nations may soon be asked to limit their production.
Monday’s gathering is a routine meeting of the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) whose task is to monitor compliance with agreement to cut production.
Beyond what is said in the meeting itself, market players will be paying close attention to any comments on the sidelines that may indicate plans for further action to rebalance global supply.
On Friday, market participants will also eye the latest weekly data from Baker Hughes on U.S. drilling activity.
Last Friday, the energy services company reported that U.S. drillers added two oil rigs, which brought the total count up to 765,, the most since April 2015, underlining concern that the ongoing rebound in U.S. shale production is derailing efforts by other major producers to rebalance the market.
Elsewhere on Nymex, gasoline futures for August delivery advanced 0.16% at $1.6100 a gallon, while August heating oil gained 0.34% to $1.5488 a gallon.
Natural gas futures for August delivery traded down 0.33% to $3.033 per million British thermal units.
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