Crude futures kicked off the week with slight gains, though downward pressure remains as many investors remain unconvinced that production cuts by Middle Eastern and Russia producers are sufficient to offset accelerating output in the U.S. and Africa.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $47.78 a barrel at 0159 GMT, up $0.12 in the Globex electronic session. August Brent crude on London's ICE Futures exchange rose $0.09 to $50.04 a barrel.
Prices were lifted by a report that Saudi Arabia has increased its Asia-bound crude prices by $0.60 a barrel in July versus June, a sign that demand in Asia remains strong.
"After the fall last week, we should see traders picking up some positions but weak volume and muted movement show the opposite," said Michael McCarthy, a chief analyst at CMC Markets.
Oil took a beating last week by dropping more than 4%, the largest weekly decline since early May. Sentiment deteriorated further after data from industry group Baker Hughes on Friday showed U.S. oil drillers adding 11 more active rigs in the week ended June 2. That marked a 20th weekly rise in a row.
U.S. crude production have averaged above 9.3 million barrels a day for four straight weeks. The government now sees production hitting nearly 10 million barrels a day next year.
Production out of Libya has also been surging. The African producer currently cranks out around 830,000 barrels a day, a huge jump compared with the sub-300,000 barrels a day seen in last July. Oil exports from the country also reached over 1 million barrels a day in late May, according to Bernstein Research.
All this points to downward pressure on prices, even though the Organization of the Petroleum Exporting Countries and Russia recently renewed and extended their commitment to cut production by 1.8 million barrels a day until March.
Meanwhile, the head of Russia's largest oil producer, Rosneft, also expressed doubts that the OPEC cuts will revive oil prices in the long run. He said producers who weren't included in the reduction pact, such as Nigeria and Libya, have been actively increasing their output.
"A number of large-scale oil producers, that do not take part in these agreements, use such conditions to strengthen their market positions, and that leads rather to new imbalance than to the sustainable development," said Rosneft Chief Executive Igor Sechin, at an energy conference in St. Petersburg over the weekend.
Nymex reformulated gasoline blendstock for July largely unchanged $1.5768 a gallon, while July diesel traded flattish at $1.4845. ICE gasoil for June changed rose $$2.00 from Friday's settlement at $440.50 a metric ton.
Write to Jenny W. Hsu at firstname.lastname@example.org
(END) Dow Jones Newswires
June 04, 2017 22:51 ET (02:51 GMT)