Oil prices edged higher on Friday but made another weekly decline after the International Energy Agency said market rebalancing was taking time due to weak OPEC compliance with output cuts.
Brent crude, the global benchmark, was up 10 cents at $52 per barrel by 2:37 p.m. ET (1837 GMT). On Thursday, the contract touched an 11-week high at $53.64.
U.S. West Texas Intermediate (WTI) crude ended Friday’s trade up 23 cents at $48.82 a barrel, after falling to a 2½ week low of $48.01 earlier in the session.
The contract fell 1.5 percent this week, its second straight weekly decline, as doubts remain that the world will consume enough crude to end a global glut.
“There would be more confidence that re-balancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve,” the IEA said in its monthly report.
The IEA said OPEC’s compliance with the cuts in July had fallen to 75 percent, the lowest since the cuts began in January. It cited weak compliance by Algeria, Iraq and the United Arab Emirates.
Faced with lingering global glut woes, OPEC and some non-OPEC members including Russia in May extended a deal to cut oil production.
The Organization of the Petroleum Exporting Countries reported on Thursday another increase in the oil cartel’s production, even though it raised outlook for oil demand in 2018. OPEC said its oil output rose by 173,000 barrels-per-day (bpd) in July to 32.87 million bpd.
Rising output from Nigeria and Libya is undermining the oil producers’ attempt to limit oil production. Nigeria and Libya are exempted from curbing output as they seek to restore supplies hurt by internal conflicts.
Meanwhile, Russian oil producer Gazprom Neft is considering resuming production in mature fields after the OPEC-led production cut agreement, a representative of the company said on Thursday.
Saudi Arabian Energy Minister Khalid al-Falih said the kingdom did not rule out additional oil production cuts, the Saudi-owned Al Sharq Al Awsat newspaper reported on Friday.
“Crude oil prices failed to hold recent gains, with a nervous market starting to doubt recent falls in inventories,” ANZ bank said in a note. “Supply-side issues also weighed on prices.”
Official data showed crude inventories in the United States, the world’s top oil consumer, fell sharply by 6.5 million barrels in the week ending to Aug. 4, as refiners ramped up run rates to the highest in 12 years due to strong demand.
On Friday, energy services company Baker Hughes reported drillers last week added three rigs in the United States, bringing the total oil drilling rig count to 768. Last week, data showed U.S. energy companies cut oil rigs for a second week in three, slowing the pace of a 15-month drilling recovery.
Meanwhile, U.S. President Donald Trump stepped up his rhetoric against North Korea again on Thursday, saying his earlier threat to unleash “fire and fury” on Pyongyang if it launched an attack may not have been tough enough.
“I think the issue that is affecting the market is the general risk sentiment of saber-rattling between Washington and Pyongyang,” said Michael McCarthy, chief market strategist at CMC Markets.