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Oil creeps up from 10-month low, down nearly 4% on week
[NEW YORK] Oil futures edged higher on Friday with a lift from a weaker US dollar, but finished a fifth straight week lower as Opec-led production cuts have failed to substantially reduce a global crude glut.
Brent futures settled up 32 cents, or 0.7 per cent, to US$45.54 a barrel. US West Texas Intermediate crude (WTI) ended up 27 cents, or 0.6 per cent, at US$43.01 per barrel.
For the week, both benchmarks lost 3.9 per cent, and oil currently sits just off 10-month lows, beset by ongoing worries about rising production. The five-week slide represents the longest stretch of weekly declines for the front-month contracts since August 2015.
Prices pared earlier gains after oil services firm Baker Hughes showed US drillers added 11 oil rigs this week, the biggest increase in three weeks.
"The higher rig count this week reflects decisions made a couple of months ago when oil prices were higher," said James Williams, president of WTRG Economics in Arkansas. He said he expects the current low prices to cause the count to fall in some weeks over the next month or two.
The US dollar was down 0.3 per cent against a basket of currencies, on track for its biggest daily percentage decline since early June after weaker-than-expected US economic data. This boosted greenback-denominated oil.
Still, oil prices remain down about 20 per cent this year despite an effort led by the Organization of the Petroleum Exporting Countries to cut production 1.8 million barrels per day (bpd).
It puts the market on course for its biggest first-half percentage fall since the late 1990s, when rising output and the Asian financial crisis led to sharp losses.
"We doubt that demand growth will accelerate sufficiently to break the current downward price momentum," analysts at Bank of America Merrill Lynch said in a note on Friday, citing surprisingly weak recent economic data in the United States, China and Asia.
Opec-led efforts to reduce production and end the oil glut have been frustrated by soaring output from the United States and Opec members Libya and Nigeria, which are exempt from the cuts.
Thanks to shale drillers, US oil production has risen more than 10 per cent in the past year to 9.35 million bpd, close to the level of top exporter Saudi Arabia.
"Rising US output continues to stress markets, with increasing evidence that improved efficiency and technology makes many of the shale plays profitable below US$40 a barrel," analysts at Cenkos Securities wrote.