Oil prices steadied on Monday, pausing for breath after coming under pressure over the past month from rising production in the United States, Libya, and Nigeria, which has taken the edge off an OPEC-led initiative to support the market by cutting production.
Brent crude futures LCOc1 were trading 9 cents higher at $47.46 per barrel by 1304 GMT. U.S. West Texas Intermediate (WTI) crude futures CLc1 were 7 cents higher at $44.81 per barrel, reports Reuters.
Both benchmarks are down some 13 percent since late May when producers led by the Organization of the Petroleum Exporting Countries extended a pledge to cut output by 1.8 million barrels per day (bpd) for an extra nine months.
Analysts said a steady rise in U.S. production, along with output increases in Libya and Nigeria, which are exempt from the OPEC cuts, were undermining the OPEC-led effort in the near term.
“There is no reason to be overly optimistic at the moment,” said Commerzbank analyst Carsten Fritsch.
Libya’s oil production has risen by over 50,000 bpd to 885,000 bpd after the state oil firm settled a dispute with Germany’s Wintershall, a Libyan oil source told Reuters on Monday. In May, OPEC supplies jumped on the back of recovering output from Libya and also Nigeria.
In the United States, data on Friday showed a record 22nd consecutive week of increases in the number of U.S. oil rigs, bringing the count to 747, the most since April 2015.
Investment bank Goldman Sachs said if the rig count holds, U.S. oil production would increase by 770,000 bpd between the fourth quarter of last year and the same quarter this year in the Permian, Eagle Ford, Bakken and Niobrara shale oilfields.
There are also indicators that demand growth in Asia, the world’s biggest oil-consuming region, is stalling. While China increased the 2017 oil import quotas for its refineries, oil demand growth has been slowing for some time, albeit from record levels.
Japan’s customs-cleared crude imports fell 13.5 percent in May from a year earlier, while India took in 4.2 percent less crude in May than the year before.
Saudi Arabia’s crude exports in April fell to 7.006 million bpd, official data showed on Monday, while Saudi Energy Minister Khalid al-Falih said the oil market simply needed time to rebalance.