Oil futures edged up on Friday, but were still heading for a weekly loss after rising U.S. stocks raised doubts that production cuts are achieving their goal of draining global inventory.
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U.S. crude futures recently traded up 8 cents, or 0.18%, at $45.72 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 3 cents, or 0.06%, to $47.89 a barrel on ICE Futures Europe.
Prices began to tick upward Friday as bargain buyers and profit takers bet that a selloff earlier this week has lost momentum. But oil markets are on track to end the week down around 4% lower after falling sharply on Wednesday when the U.S. Energy Information Administration published a surprise increase in crude stocks in its weekly data.
"The inventory surplus in the U.S. and across much of the globe seems to be the black cloud that shows up to rain on the bulls parade whenever a rally gets going, and until real progress is made on that front, it may be difficult to see a reversal of this negative trend," said analysts at TAC Energy.
The unexpected increase in U.S. stocks undermined confidence in whether the Organization of the Petroleum Exporting Countries would meet its goal of reducing global stocks to their five-year average. The cartel, along with other major producers including Russia, last month agreed to extend production cuts until March.
"The very slow decline in U.S. crude inventories, despite all the cuts being implemented by OPEC and Russia, has the market questioning if OPEC can really succeed to bring down inventories to average levels," said Giovanni Staunovo, an analyst at UBS.
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The increase reported Wednesday came after eight straight weeks of falling stockpiles, and some analysts said the market's sharp selloff could prove to be an overreaction.
"I still believe that the weekly data was a one off and now it's time to wait for next Wednesday to see if it was an anomaly or if it was a change in the trend," Mr. Staunovo said.
Energy Aspects says the cartel must also cut exports, in addition to output, to reduce the global glut amid record U.S. exports. Recovering production out of Nigeria and Libya, the two OPEC members exempt from the cutback deal, is also a negative.
Still, many see U.S. shale producers as the main culprit for keeping the oil market oversupplied. The number of active U.S. oil-drilling rigs there have risen for 20 straight weeks, according to oilfield-service company Baker Hughes. Its weekly report is due later Friday.
But some market watchers say last week's slight decrease in average daily U.S. oil output could be an indication that some high-cost producers are feeling the heat as prices have averaged below $50 a barrel since April. "The decreased production shows we are probably closer to a floor," said Michael McCarthy, a CMC Markets analyst.
One supportive factor for the market has been Asian demand, in particular China. Crude imports by the world's second biggest economy notched their second-highest level on record in May. Meanwhile, India's oil demand for April was the highest since November.
Gasoline futures rose 0.53 cent, or 0.36%, to $1.4972 a gallon. Diesel futures were up 0.75 cent, or 0.53%, at $1.4298 a gallon.
--Alison Sider contributed to this article
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(END) Dow Jones Newswires
June 09, 2017 10:37 ET (14:37 GMT)