Crude oil yesterday edged up from multi-month low, but prices remained under pressure from a supply glut that has persisted despite the efforts led by the Organisation of Petroleum Exporting Countries (OPEC) efforts to balance the market.
Since peaking at $55 per barrel in late February, crude has dropped around 20 per cent, erasing the gains recorded at the end of 2016, in the wake of the initial OPEC-led production cut.
OPEC and other producers agreed to reduce output by 1.8 million barrels per day (bpd) from January for six months, and last month extended the deal for a further nine months until March 2018.
However, oversupply has persisted, particularly with output rising in Libya and Nigeria, which were exempt from the cuts due to unrest that had limited their output.
OPEC and non-OPEC oil producers’ compliance with the deal to cut output reached its highest in May since they agreed on the curbs last year, reaching 106 per cent last month in May.
OPEC supplies, however, jumped in May as output recovered in Libya and Nigeria, both exempt from the production reduction agreement.
Reuters reported that Libya’s oil production rose more than 50,000 bpd to 885,000 bpd after the state oil company settled a dispute with Germany’s Wintershall.
Nigeria’s oil production is also rising as exports of the country’s Bonny Light crude are set to reach 226,000 bpd in August, up from 164,000 bpd in July.
Brent crude futures were up 60 cents thursday at $45.42 per barrel , after falling as low as $44.53. They fell 2.6 per cent in the previous session to $44.35, their lowest since November 2017.
US crude futures were up 40 cents at $42.93 a barrel, after also slipping.
On Wednesday, they touched $42.05 per barrel, their lowest intraday level since August 2016.
Prices slid on Wednesday despite a bigger-than-expected drop in US crude stockpiles, and a drop in gasoline stocks.
Tropical storm Cindy travelling through the Gulf of Mexico, home to about 17 per cent of US crude and five per cent of dry natural gas output, disrupted some operations, also offered limited support.
Overall, output is still increasing in the United States where some shale producers can produce profitably even if oil prices drop below $40 a barrel.