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Oil heads for weekly gain, shrugs off ample supply; U.S. output eyed

Latest Update: May 15, 2015 | 136 Views

SINGAPORE: Oil prices were little changed on Friday but were set to end the week slightly higher, buoyed by a weaker dollar and forecasts for lower growth in U.S. crude output.

U.S. crude is set to rise for a ninth week, which would be the benchmark’s longest winning streak since 1983.

U.S. crude stockpiles have fallen from record levels, while the government has trimmed forecasts for crude output growth in 2015 and 2016.

June West Texas Intermediate futures were down 6 cents at $59.82 a barrel as of 0631 GMT. July Brent crude rose 3 cents to $66.73 a barrel. Front-month Brent is on track for a weekly gain after a 1.6 percent decline last week interrupted its month-long rally.

But analysts said prices have outperformed weak oil fundamentals. Supply continues to exceed demand growth, which has been curbed by a lackluster global economy.

“Recent price action across a number of commodities suggests the rally in recent months has largely run its course,” ANZ analysts said in a note.

The bank noted that WTI has failed to rise above $62 a barrel twice in the past week despite a weaker U.S. dollar.

Oil prices also did not react much to rising tensions in the Gulf, after Iranian naval vessels fired shots at a Singapore-flagged tanker in the Gulf on Thursday.

In fact there are worries the recent oil price rally may prompt U.S. shale oil producers to ramp up output.

“WTI tapered below its key $60 a barrel handle likely on expectation that further rally in prices may allow shale producers to reinstate production,” OCBC analysts said.

Baker Hughes will be releasing weekly U.S. rig count data later on Friday. The data has become a closely watched indicator to gauge adjustments in U.S. production.



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