The Organisation of the Petroleum Exporting Countries and other exporters – including Russia – agreed last year to cut output by around 1.8 million barrels per day in the first half of 2017, but so far the move has had little impact on inventory levels.
US crude inventories swelled 8.2 million barrels last week to a record 528.4 million barrels
On Friday, US crude CLc1 settled down 79 cents, or 1.6 percent, at $48.49-barrel, while Brent crude LCOc1 ended down 82 cents, or 1.6 percent at $51.37-barrel as prices settled at three-month lows.
US oil and gas drilling has picked up, with producers planning to expand production in North Dakota, Oklahoma and other shale regions, while output has jumped in the Permian, America’s largest oilfield.
US drillers added eight rigs in the latest week, lifting the rig count to 617, its highest since September of 2015, Baker Hughes said.
“We have not seen production cuts undertaken by the world’s producers really alleviate the overhang in inventories,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.