Oil prices fell by over $1 a barrel on Friday as talk of a plan by some producers to freeze output levels was tempered by continued concerns of an oversupplied market after a record build in US crude inventories.
Brent futures were down 1.07 cents at $33.21 a barrel, with US crude falling by $1.28 to $29.49, Reuters reported.
Oil prices rose by more than 14% earlier in the week on Saudi Arabia and Russia’s agreement to freeze output at January levels.
But while Iran’s Oil Minister Bijan Namdar Zanganeh welcomed the plan, he fell short of committing to it and Iranian sources told Reuters that capping output is not enough to rebalance the market.
A record build in US crude inventories last week also stoked concerns over persistent global oversupply. Crude stocks rose by 2.1 million barrels to a peak of 504.1 million, data from the US government’s Energy Information Administration showed on Thursday.
The recovery at the back end of the WTI curve this week is prompting US shale producers, for the first time in months, to inquire and place new hedges to lock in 2017 prices of around $45 a barrel.
The activity reflects expectations of growing investor and lender pressure to safeguard heavy debt requirements down the road, as well as declining drilling costs, allowing companies to break even at lower prices.
