DY: Oil price heads for weekly loss on supply strength
Oil prices fluctuated on Friday and were headed for their first weekly loss in a month after data showed US oil supplies were at an 80-year high.
The US Energy Information Administration reported on Thursday that US crude inventories reached another record high last week, a sign that cheap prices haven't begun to affect production yet. Oil futures have been rallying in recent weeks on the expectations that low prices will affect output and alleviate the global glut that sent prices in a tailspin last year.
The EIA said oil inventories grew by 7.7 million barrels last week to 426 million barrels, the highest level for this time of year for at least 80 years.
April dated Brent, the global benchmark, recently traded at $US60.32 a barrel, up 0.2 per cent, on London's ICE Futures exchange. US light, sweet crude for March delivery was little changed at $US51.17 a barrel on the New York Mercantile Exchange.
The market is bracing for data later Friday on the number of oil drilling rigs in the US The count by oil-field service company Baker Hughes has been falling dramatically in recent months, feeding optimism by some investors that US production growth will soon start to slow. That led to a rally in prices, with Brent up close to 30 per cent from its mid-January low.
However, analysts caution that the global oil market is still oversupplied by up to 2 million barrels a day.
"Rig counts may be falling but as yet there is no sign of a decline in domestic production," David Hufton of PVM wrote in a note to clients. The EIA also reported US production was running at a multiyear high of 9.3 million barrels a day.
On Friday, financial markets were focused on the impasse between Greece and its creditors over a new financing deal for the country. Eurozone finance ministers are due to meet later on Friday to hammer out a deal to avert a potential Greek exit from the eurozone, a prospect that has rattled markets in recent weeks. Tepid oil demand from Europe's struggling economies contributed to the oil price crash last year.
Nymex reformulated gasoline blendstock for March -- the benchmark gasoline contract -- fell 0.5 per cent to $US1.6084 a gallon, while ICE gas oil for March changed hands at $US575.25 a metric ton, up $US7 from Thursday's settlement.
