Oil prices edged lower on Friday but were set for the first weekly gain in three weeks after jumping 4% a day earlier due to a surprisingly large drawdown in US crude stocks.
Brent and West Texas Intermediate crude futures have gained nearly 6% this week and are on course for their biggest weekly gain in three weeks following two consecutive weeks of declines, after major producers Saudi Arabia and Russia agreed on Monday to cooperate on stabilizing the oil market, Reuters reported.
London Brent crude for November delivery was down 52 cents at $49.47 a barrel after rising above $50 for the first time in two weeks and settling up $2.01, or 4.2%, on Thursday.
The International Energy Agency has said it sees demand finally exceeding supply in the third quarter of 2016, meaning record crude stockpiles around the world should also start falling.
But analysts from Morgan Stanley said on Friday they saw risks of supply and demand rebalancing being delayed.
“We are not yet changing our forecast for a mid-2017 rebalancing, but our conviction level is falling,” MS said in a note. “Once again, we see an increasing probability for several unexpected bearish developments to come together, which could push off rebalancing (seasonally-adjusted demand exceeding supply) to late 2017 or even 2018.”
If OPEC and non-OPEC producers agree to implement measures to limit supply when they meet next month in Algeria, it should help the markets rebalance.
Oil prices shot up on Thursday after US government data showed the biggest weekly drop in stockpiles since January 1999.
