US crude oil little changed after losses, record output weighs

Oil prices steady amid US supply growth, OPEC uncertainty

Crude oil futures erased earlier losses on Friday but the U.S. benchmark price was set to lose ground for the second week, squeezed by record United States production and expectations of OPEC boosting output.

USA and OECD days of supply are forecast to remain close to their previous five-year average levels through 2019.

Figures reported directly from OPEC members showed even deeper declines in production.

"Though crude oil has receded significantly in the charts, market fundamentals remain supportive as robust global demand and declining stockpiles bolster prices upwards", Benjamin Lu, commodities analyst at Singapore-based broker Phillip Futures, said in a note. Meanwhile, Brent climbed last month following President Donald Trump's decision to reimpose sanctions on Iran, and as Venezuelan output plunged amid an economic crisis.

Brent prices traded as low as US$77.36 a barrel on Friday.

Also at the forefront of investors' minds is OPEC and its allies' next step on their agreement to curb output.

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Sources told Reuters last week that Saudi Arabia, the effective leader of OPEC, and Russian Federation were discussing boosting output by about 1 million bpd to compensate for losses in supply from Venezuela and to address concerns about the impact of USA sanctions on Iranian output. The proposal is yet to be approved by other partners, and officials from some nations have said they aren't in favor. Total volume traded Friday was about 11 per cent above the 100-day average. The contract has fallen 0.6% this week.

Crude stocks at the Cushing, Oklahoma, delivery hub for WTI fell 556,000 barrels, EIA said.

WTI's discount to Brent widened, settling at $11.02 a barrel after ballooning to as much $11.57 during the session, largest since 2015.

USA crude production rose to 10.77 million barrels a day, the highest in weekly data going back to 1983, the Energy Information Administration said Thursday. That was the eighth time drillers added rigs in the past nine weeks.

For the week, WTI was on track for a 1 percent fall, adding to last week's near 5 percent decline and shrugging off a 3.6-million-barrel drop in U.S. crude stockpiles last week. Hedge funds and other money managers cut their bullish wagers on USA crude futures and options in the week to May 29, as prices dropped by about 7 per cent, according to data released by the Commodity Futures Trading Commission on Friday.

Russia, one of the world's largest crude producers, and the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut their combined output by 1.8 million bpd in order to smooth out bloated oil inventories and prop up prices.

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