Investing.com – Oil prices rebounded Friday from the previous day’s rout, but still logged their biggest weekly loss since the second quarter after data showed U.S. drillers ramping up output, even as a second global energy agency said the market was adequately supplied.
A weekly reading on the U.S. oil rig count rose by eight, the first such climb in four weeks, which signaled the U.S. shale crude industry was intensifying drilling with prices near four-year highs. Shale drillers were largely responsible for the 2014-2017 crude glut.
The Paris-based IEA, which watches over the interest of Western crude importers said in its monthly report that oil markets looked “adequately supplied for now” after a big production increase in the last six months. But it added that the spare capacity of oil producers to deal with emergencies were down to just 2% of global demand.
The IEA’s remarks came a day after Vienna-based OPEC, which groups some of oil’s biggest exporters, slashed its own demand growth forecast for this year by 800,000 barrels per day to 1.54 million bpd, citing headwinds to the global economy. OPEC even suggested there could be another oil glut by 2019 if output continued rising.
That warning, along with a global rout in equities and a surprisingly large weekly build in U.S. crude stockpiles, hammered oil prices down by 3% on Thursday.
The IEA’s follow-up caution on Friday saw mixed reactions from oil traders and analysts who had been preparing for crude to go to $100 a barrel after U.S. sanctions against Iran oil exports begin in November.
“I see the bearish story coming in the next six months, but think we will get a rally first,” Scott Shelton, an energy broker at ICAP (LON:) in Durham, N.C., said, agreeing in principle with the IEA’s outlook. “The focus remains on global macro for now.”
But Phil Flynn, analyst at the Price Futures Group in Chicago, said the IEA was “famous for underestimating demand” and was back in that role to push prices lower when higher investments were required in oil.
“Their underestimation probably helped lead us to where we are today,” Flynn said. “Is it any wonder why global spare production capacity is at an all-time low?”
US West Texas Intermediate () crude settled up 53 cents, or 0.7%, at $71.34 a barrel on the day. For the week it fell 4%, the sharpest slide since the week to May 20.
London-traded crude, the benchmark outside the U.S., was up 16 cents, or 0.2%, at $80.42 by 2:42 PM ET (18:42 GMT). It fell 4.4% on the week, the biggest drop since the week to April 1.
The weekly corrections aside, Brent remained up 20% on the year and WTI 18%.
On other U.S. energy markets, rose 0.6% to $1.9432 a gallon, while , a proxy for distillates and diesel, fell 0.4% to $2.3224 a gallon. futures fell 2% to $3.16 per million British thermal units.
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