Oil prices fell more than 2 percent on Friday, wiping out the week's gains after a tanker-tracking firm reported supply from OPEC is rising.
OPEC's July oil supply was set to rise by 145,000 barrels per day (bpd) compared to June, Reuters reported citing data from PetroLogistics, a company that tracks OPEC supply forecasts.The increase in oil supply would push production above 33 million barrels per day.
Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month's gains, according to PetroLogistics.
U.S. West Texas Intermediate (New York Mercantile Exchange: @CL.1) futures erased earlier gains following the PetroLogistics report. They were ended Friday's session down $1.15, or 2.5 percent, at $45.77 per barrel. Brent crude (Intercontinental Exchange Europe: @LCO.1) fell $1.30, or 2.6 percent, at $48 a barrel by 2:38 p.m. ET (1838 GMT) .
WTI intraday chart
WTI posted a nearly 1.7 percent decline on the week, after earlier being on pace to post a roughly 1.5 percent weekly gain.
The day's losses briefly eased after oilfield services firm Baker Hughes reported its weekly count of oil rigs operating in the United States ticked down by one rig to a total of 764. The rig count has fell or barely increased in recent weeks, suggesting early signs of moderating U.S. production growth.
Government data showing a larger-than-expected drop in U.S. crude oil and fuel stockpiles had boosted oil prices to six week highs earlier this week.
Friday's decline took place as investors braced for a key meeting between OPEC and non-OPEC members next week. The oil-producing countries will meet to discuss compliance of agreed production cuts and how to bring down inventory levels.
"We're keying on everything ahead of the OPEC meeting," said John Kilduff, founding partner of Again Capital. "They can't add even a barrel right now."
OPEC's output has risen in the last two months, pushed up by a recovery in production in Libya and Nigeria. The two cartel members are exempt from an agreement among major oil producers to cut output through March in a bid to shrink global crude inventories and support commodity prices.
OPEC and oil exporters, including Russia, have agreed to remove 1.8 million barrels of day from the market.
OPEC faces increasing uncertainty after OPEC-member Ecuador said it will start to increase production again due to revenue reasons, according to Helima Croft, global head of commodity strategy at RBC Capital Markets.
"Ecuador's move underscores the sharp divergence in the economic fortunes of the sovereign
producers, with the most cash strapped states in urgent need of financial relief and the flusher
nations having the time, and perhaps even the incentive, to let the current cut run its course," Croft said in a research note.
The market is looking for clear signs that the production cuts are having an impact.
A report that Saudi Arabia will cut its exports by a further 1 million barrels a day briefly propped up prices earlier this week, but the rally soon faded in the absence of hard data or a firm commitment from the Saudis.
— Reuters contributed to this story.
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