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Rescue ships work to extinguish the fire on Sanchi tanker.
Rescue ships work to extinguish the fire on Sanchi tanker.

Oil Heads for 4th Weekly Gain

Oil Heads for 4th Weekly Gain

Oil prices rose for a sixth day on Friday after Russia’s Energy Minister Alexander Novak said global crude supplies were “not balanced yet”, alleviating market concerns about a wind-down of the OPEC-led deal to reduce production.

Brent crude futures rose 61 cents to settle at $69.87 a barrel. US West Texas Intermediate crude futures rose 50 cents to $64.30. WTI hit its strongest since late 2014 at $64.77 on Thursday. For the week, Brent rose 3.3% while WTI jumped 4.7%, CNBC reported.

Markets remained buoyed by the comments throughout the session, shrugging off data that suggested the US production may continue to surge.  

The agreement between the Organization of Petroleum Exporting Countries and Russia reached in late 2016 to cut 1.8 million barrels of crude daily is due to last until the end of 2018.

Major oil producing-countries have grown concerned that as prices remain near these levels, it will spur additional production from US shale patches in Texas and North Dakota, risking overwhelming the market with additional supply, and hurting OPEC’s market share.

US energy companies added 10 oil rigs this week, the biggest increase since June, bringing the total rig count to 752, the most since September, General Electric Co.’s Baker Hughes energy services firm said.

“If you look at any kind of momentum indicator, this is telling you this is way overbought,” said Robert Yawger, director of energy futures at Mizuho in New York. “However, there are definitely issues supporting the market.”

US crude production fell in the most recent week by nearly 300,000 barrels per day to about 9.5 million bpd, which analysts attributed to the deep freeze across most of the country.

The US Energy Department expects production will blow through 10 million bpd in the next few months, en route to 11 million bpd by next year, rivaling Russia and Saudi Arabia.

Futures contracts show an expectation for prices to pull back by the yearend, with the December US crude futures contract currently trading just above $60 a barrel.

Later-dated futures trading lower than the spot price is known as backwardation and is expected to inhibit production because it implies a lower price for future barrels sold.

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