Oil prices rose in volatile trade Friday, but analysts said that ample global supplies of crude are likely to prevent sharp price gains.
Market participants are expecting the latest oil rig count out of the U.S. later Friday. Oil prices have been locked in a tight range below $50 a barrel in recent months as investors weigh the damage low prices have inflicted on the industry against the continuing high level of oil stocks around the world.
“Both oil bears and bulls are wary of moving markets in either direction,” said Daniel Ang, analyst at Phillip Futures.
Brent crude LCOF6, -0.02% the global oil benchmark, rose 0.6% to $44.45 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLZ5, -1.38% were trading up 0.5% at $41.91 a barrel.
Underscoring the volatility in the oil market, both benchmarks are up for the week, with Brent rising close to 2% and WTI up around 3% after dipping to multi-month lows below $40 a barrel earlier in the week.
Analysts at FXTM said that investor sentiment toward crude oil remains weak and this week’s relief rally may offer an opportunity for bearish investors to send prices back below $40 a barrel.
Earlier this week, the U.S. Energy Information Administration said domestic crude-oil inventories rose by 252,000 barrels last week, less than expected by the market. However, U.S. oil inventories remain near levels not seen for this time of year in at least the last 80 years.
Meanwhile, other major producers such as the members of the Organization of the Petroleum Exporting Countries and Russia have continued to pump crude at a high pace in a bid to defend—and win—market share. The market is also expecting the return of Iranian exports to the global oil market following the lifting of international sanctions against Tehran.
“Additional oil could reach the market from Iran in the course of the first quarter of 2016, thereby swelling the oversupply,” analysts at Commerzbank said in a note to clients. “We regard a quantity of 500,000 barrels per day as realistic, though this should already be priced in and thus pose no additional burden on prices.”
Investors are awaiting the latest U.S. oil rig count released later in the day by Baker Hughes Inc. The number of rigs drilling for oil in the U.S., which is viewed as a rough proxy for activity in the oil industry, has fallen sharply since oil prices started falling last year. But last week the rig count rose for the first time in 11 weeks, by two rigs to 574, highlighting the resilience of the U.S. shale industry despite the continuing price rout.
Nymex reformulated gasoline blendstock—the benchmark gasoline contract—fell 0.3% to $1.28 a gallon. ICE gasoil changed hands at $427.25 a metric ton, up $0.25 from the previous settlement.
