Oil up slightly, low U.S. inventories weigh on high rig counts

Fri May 12, 2017 5:03pm EDT
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By Julia Simon

NEW YORK (Reuters) - Oil prices settled slightly higher on Friday as lower U.S. crude inventories and increasing support for continued OPEC-led production cuts inspired hope that the global supply glut can be reduced.

Benchmark Brent crude LCOc1 settled up 7 cents at $50.84. U.S. light crude CLc1 was up 1 cent at $47.84.

On Thursday, oil prices rallied as a larger-than-expected weekly draw in U.S. crude inventories C-STK-T-EIA of 5.3 million barrels suggested that output cuts by the Organization of Petroleum Producing Countries (OPEC) and other producers were helping reduce a global glut in crude, analysts said.

OPEC and other producers meet on May 25 to decide whether to extend the output cuts they agreed to last November. Saudi Arabia, OPEC's de facto leader, has said it expects an extension to the end of 2017 or possibly beyond.

Commerzbank said in a note it was skeptical about OPEC's ability to support prices in the long term.

"Owing to the rapid recovery in U.S. oil production, OPEC obviously only has limited influence on prices via supply curbs," it said.

U.S. drillers added oil rigs for the 17th straight week, Baker Hughes data showed on Friday. RIG-OL-USA-BHI. Horizontal rigs, the type most often used to extract oil or gas from shale, rose 8 to 742. Oil rigs rose 9 to 712.

U.S. crude production C-OUT-T-EIA has risen more than 10 percent since mid-2016 to more than 9.3 million bpd, close to the levels of top producers Russia and Saudi Arabia.   Continued...

Islands that are used for pumping oil are shown just offshore in Long Beach, California, U.S., May 10, 2017.   REUTERS/Mike Blake