Oil prices have edged lower by more than one per cent today while a new report suggests Opec's production cuts are unlikely to bump prices above $60 a barrel this year.
Global benchmark Brent crude fell as low as $51.01 a barrel this morning while West Texas Intermediate slipped to $47.84. The new lows come on the back of Friday's oil rig data from Baker Hughes, which said US drillers added 14 rigs for a total of 631 last week, the most since September 2015.
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"While producers remain confident the Organisation of the Petroleum Exporting Countries' (Opec) measures to curb output will bring the market into balance, price action suggests traders aren't buying it," said Craig Erlam, analyst at Oanda.
A report today by energy lender Arab Petroleum Investment (Apicorp) echoed the sentiment that Opec's cuts aren't doing enough to prop up prices despite record high levels of compliance.
"While oil prices are expected to recover towards the end of the year, they will remain in the $50-$60 band given the high level of stocks which will combine to put a cap on the price. As such, average oil prices for 2017 are not expected to exceed $60 per barrel."
Apicorp, which is owned by the member states of the Organisation of Arab Petroleum Exporting Countries, said it anticipates the market will rebalance in the second half of the year. It also expects the cartel to maintain its agreed six-month production quota at around 32.5m barrels per day (bpd) for the rest of the year.
Opec will meet 25 May in Vienna, Austria, to decide whether to extend its 1.2m bpd production cut. Saudi Arabia's energy minister, Khalid Al-Falih, has said Opec will extend the deal if stockpiles are still above their five-year average.
"An extension to the cuts may be necessary before the market will rebalance, which may be easier said than done as that would involve conceding further market share to the US," Erlam said.