More gloom on global oil markets on Friday as prices slid for a second day, effectively ending the 8-day rally.
More US oil rigs in use, higher production and a feeling the global glut is not going away saw prices ended sharply lower Friday for a weekly loss of nearly 4%.
The number of active US oil rigs rose by 7 to 763, easily making up for the drop of 2 the week before, according to the weekly rig use report from Baker Hughes.
The data contradicted some analyst expectations that the rig use would continue to fall, following the previous weekly’s small dip which was the first since January.
The total active US rig count, which includes oil and natural-gas rigs, also climbed by 12 to 952, according to Baker Hughes.
That combined with the weekly rise in total US crude production reported by the Energy Department Administration on Thursday helped push prices below where they started the 8 day rally nearly two weeks ago.
On Thursday, the EIA reported that while crude stocks in US storage fell by 6.3 million barrels in the week ended June 30, total domestic production jumped by 88,000 barrels to 9.338 million barrels a day.
August West Texas Intermediate crude tumbled $US1.29, or 2.8%, to settle at $US44.23 a barrel in New York.
For the week, prices were down roughly 3.9%, the sixth such loss in seven weeks.
In London, September Brent crude futures, dropped $US1.40, or 2.9%, to $US46.71 a barrel, for a loss of about 4.2% for the week.
Analysts at Morgan Stanley said in a report on Thursday that if the OPEC production cap of around 1.8 million barrels a day cuts aren’t enough to balance the market, US shale production will need to slow down. There is no sign of that happening at the moment.
Reuters reported late last week that OPEC oil exports climbed for a second month in June.
OPEC exported 25.92 million barrels per day (bpd) in June, up 450,000 bpd from May and 1.9 million bpd more than a year earlier.
The rise in exports came despite OPEC’s vow to rein in production until March 2018. Reuters’ monthly OPEC production survey found output jumped to a 2017 high last month as OPEC members Nigeria and Libya (which are exempt from the production cap deal) continued to pump more.
