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Crude settles lower as oversupply concerns mount

Published 02/24/2017, 02:46 PM
Updated 02/24/2017, 02:54 PM
© Reuters.  Crude ends week 1.1% higher

© Reuters. Crude ends week 1.1% higher

Investing.com – Crude futures reversed gains from the previous session to settle lower on Friday, after the latest Baker Hughes U.S. oil rig count rose by 5, topping 600 for the first time since October 2015.

On the New York Mercantile Exchange crude futures for April delivery slid 0.83% to settle at $53.99 a barrel, while on London's Intercontinental Exchange, Brent lost 59 cents to settle at 55.99 a barrel. Despite the slump on Friday, crude ends the week 1.1% higher.

On Friday, oilfield service firm Baker Hughes reported its weekly count of U.S. oil rigs rose by 5 and topped 600 for the first time since October, 2015, which added to concerns that record U.S. crude production may curtail OPEC's effort to drain excess supply in the industry.

Speaking at the International Petroleum Week conference in London last week, OPEC Secretary General, Mohammed Barkindo estimated that OPEC member states are about 90% in compliance with a global pact to cut production and noted the willingness of non-OPEC members to comply with the deal.

In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day (bpd) in an effort to combat the oversupply issue that has pressured prices over the last two years.

The rise in U.S. oil rigs came against a bullish report on crude inventories, released a day earlier, as the U.S. Energy Information Administration (EIA) said that crude oil inventories rose by only 0.564 million compared to estimates of an increase of 3.745 million barrels.

Next week crude inventories report is likely to be closely watched by market participants.

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