Oil dips, on course for biggest weekly drop in a month,over doubts that an OPEC-led production cut will restore balance to an oversupplied market.
Front-month Brent futures were at $52.87 a barrel at 0820 GMT, down 12 cents from their last close and set for a 5.4 percent weekly drop, the most since the week of March 10.
Front-month U.S. crude futures, which rolled over on Friday, were at $50.61 a barrel, down 10 cents and on course for a 4.8 percent weekly decline, also the most since March 10.
Saudi Arabia and Kuwait, key members of the Organization of the Petroleum Exporting Countries, favour extending their production-limiting deal with non-member producers into the second half of the year.
Russia’s Energy Minister Alexander Novak, however, declined to say whether the top oil producer would adhere to an extension before a joint meeting on May 25, saying global stocks were declining.
“The situation is gradually improving from the beginning of March,” Novak said.
Both oil benchmarks fell this week as doubts emerged over the effect of the OPEC/non-OPEC production cut by almost 1.8 million barrels per day (bpd) during the first half of the year.
Thomson Reuters Eikon data shows that a record 48 million bpd of crude is being shipped across ocean waters in April, up 5.8 percent since December.
The market is taking note: The value of the Brent forward curve has slumped steadily since the start of the OPEC-led cuts in January. The two-year calendar strip for Brent futures, or the average value of all contracts over that period, is down more than $4 since January at around $54.10 a barrel.
Some producers that are not involved in the supply-curbing pact have increased exports.
“The resurgence of U.S. shale continues to sabotage … efforts to stabilise the saturated markets,” said Lukman Otunuga of futures brokerage FXTM.
U.S. output has jumped almost 10 percent since mid-2016 to 9.25 million bpd, close to that of the world’s top two producers, Saudi Arabia and Russia.
The chief executive of France’s Total warned this week that prices could fall further due to rising U.S. production.
“The cut, even if it’s extended, is not going to make much difference,” said Sukrit Vijayakar, director of energy consultancy Trifecta.
He pointed to elevated crude stocks as the main reason for oversupply.