Oil were little changed on Friday ahead of the Christmas and New Year holiday week as the market waited to see how OPEC would manage its planned output cuts with Libya expecting to boost production.
Crude is still trading around its highest since mid-2015, supported by a deal by the Organization of the Petroleum Exporting Countries (OPEC) and non-members to lower output by almost 1.8 million barrels per day from Jan. 1.
Brent crude was up 11 cents at $55.16 a barrel as of 2:10 p.m. ET (1910 GMT), after rising 1.1 percent on Thursday. U.S. crude settled up 7 cents to $53.02.
For the week, the U.S. contract rose for a second week in a row, gaining 2.2 percent during that time, while Brent looked like it would slip lower for a second week in three.
Futures held their losses after oilfield services firm Baker Hughes reported its weekly count of oil rigs operating in U.S. fields rose for an eighth straight week. The rig count rose by 13 to 523, compared to 538 rigs operating at this time last year.
“The complex has begun the pre-holiday trade under moderate downside pressures that are erasing yesterday’s gains,” Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
“This week’s trade has offered no significant surprises as price consolidation continues with the market adopting a wait and see attitude regarding OPEC’s execution of planned production curtailments,” Ritterbusch said.
While major OPEC producers including Saudi Arabia and Iraq have told customers that supply will be cut in line with the OPEC deal, Libya and Nigeria are exempt because conflict has already curbed their output.
Libya’s National Oil Corp hopes to add 270,000 bpd to national production over the next three months after announcing on Tuesday the reopening of pipelines leading from two major fields, Sharara and El Feel.
Nonetheless, efforts to restore Libyan output since the North African country’s 2011 uprising have been repeatedly stymied and political splits still present a risk that the plan may not go smoothly.
The dollar index steadied on Friday not far below a 14-year peak of 103.65 reached earlier this week.
A firmer dollar makes dollar-denominated commodities including oil more expensive for holders of other currencies.
Also weighing on oil was a surprise increase in U.S. crude stocks reported on Wednesday in the government’s weekly supply report — and the prospect of sales beginning in January of crude from the U.S. Strategic Petroleum Reserve (SPR).
“Crude failed to maintain gains this week following the unexpected build in U.S. crude stockpiles, which revived the oversupply concerns,” said Lukman Otunuga, a research analyst with FXTM.
“With some anxieties still lingering over the compliance side of the unexpected cut agreement, oil could end up extremely volatile with losses expected if production fails to decline.”
The volume of extra oil reaching the market from the SPR could be sizeable. Consultancy Poten & Partners said on Thursday the reserve could be drawn down by some 190 million barrels between 2017 and 2025 if all planned sales went ahead.