Oil prices have rebounded after shedding two per cent yesterday, but they are still on track for a second straight week of losses as the Organisation of the Petroleum Exporting Countries (Opec) struggles to tighten reserves.
Global benchmark Brent crude was trading 0.66 per cent higher at $51.78 a barrel while West Texas Intermediate (WTI) was 0.92 per cent higher at $49.42 a barrel at the time of publishing.
"Crude oil prices have bounced back from yesterday’s sharp sell-off, one that was driven by continued fears about rising US output following this week’s inventory data compounded by Libya bringing its largest oil field (Sharara) back on-line, merely adding to headwinds Opec already faces with its production cut efforts. Two-week downtrends [are] yet to be overcome however," said analysts at Accendo Markets.
Opec and non-Opec nations, including Russia, agreed to cut output by 1.8m barrels per day (bpd) for the first six months of 2017. Now, Opec is under pressure to extend those cuts for another six months to counter rocketing production in places like the US.
US shale production has surged, rising 10 per cent since mid-2016 to 9.27m bpd. Recently, production has also risen in Libya, which was exempt from the Opec member output cuts.
"Even though inventories have started to fall, they remain at elevated levels...Stocks have settled into the 62-65 days consumption or approximately 2.98bn barrels," ANZ bank said in a note, according to Reuters.