SEOUL – Oil prices dipped on Friday as the market looked for clues on how effectively the Organisation of Petroleum Exporting Countries (OPEC) production cuts are working to absorb a global supply overhang.
Brent crude was down 10 cents, or 0.19 per cent, at $51.64 per barrel.
US West Texas Intermediate crude (WTI) edged down 3 cents, or 0.06 percent, at $48.72 a barrel.
Oil prices fell sharply last week on concerns that production cuts by OPEC and non-OPEC members, including Russia, are not cutting a supply overhang as quickly as expected in the face of increased US output.
“Saudi Arabian Energy Minister Khalid Al-Falih continued to express concern about high global inventories,” ANZ said in a note.
“However, he did reiterate that the market is currently going in the right direction and fundamentals had improved.” If crude inventories remain high, OPEC could extend its oil output cut deal, the Saudi energy minister said on Thursday.
“Much talk has been made of OPEC, non-OPEC compliance, but the fact is, that when you dig into the numbers, only Saudi Arabia has been pulling its weight,” said Jeffrey Halley, a senior market analyst at OANDA brokerage in Singapore.
Official data showed crude inventories in the United States, the world’s top oil consumer, fell last week as imports plunged, dropping after nine consecutive increases.
Crude stockpiles fell by 237,000 barrels in the week to March 10, beating analyst expectations for an increase of 3.7 million barrels.
Organisation of Petroleum Exporting Countries and non-OPEC members including Russia reached a landmark agreement last year to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017.
But OPEC’s monthly report showed global oil inventories increased in January to 278 million barrels above the five-year average.
In a sign that OPEC’s efforts have had little impact, oil shipments to Asia have increased 3 percent since the OPEC supply cut deal was made. Iraq’s March oil exports have averaged 3.25 million barrels-per-day in the first 14 days of the month, slightly lower than February’s 3.27 million bpd.
But the decline was not as much as expected, which could raise doubts over the country’s compliance with the OPEC supply cut deal.