Investing.com - Oil traders will continue to weigh ongoing efforts by major global crude producers to reduce a supply glut against a steady increase in U.S. production levels in the week ahead.
Members of the joint OPEC and non-OPEC ministerial monitoring committee held a meeting in Saudi Arabia Friday, at which they confirmed that compliance with a deal to cut output is at its highest ever, further stoking expectations for market rebalancing later this year.
OPEC and 10 producers outside the cartel, including Russia, have been holding back oil output by around 1.8 million barrels a day since the start of last year to slash global inventories to the five year-average. The arrangement is set to expire at the end of 2018.
OPEC will meet in June to decide whether to extend the production-cut agreement. Saudi Arabia, OPEC's de-facto leader, has indicated the participants could continue to hold back output into next year, despite evidence the glut in global supplies have shrunk to levels just above the oil cartel's target.
But their efforts have been somewhat stifled by rising non-OPEC output, led by U.S. shale producers.
U.S. drillers added five oil rigs in the week to April 20, bringing the total count to 820, General Electric (NYSE:GE)'s Baker Hughes energy services firm said in its closely followed report on Friday.
That was the highest number since March 2015, underscoring worries about rising U.S. output.
Indeed, domestic oil production - driven by shale extraction - rose to an all-time high of 10.54 million bpd last week, the Energy Information Administration (EIA) said, staying above Saudi Arabia's output levels and within reach of Russia, the world's biggest crude producer.
Oil prices settled with a modest gain Friday, shaking off earlier weakness sparked by a tweet from U.S. President Donald Trump, to finish higher for the week.
Trump had taken to Twitter early Friday to blame OPEC for “artificially high” prices.
OPEC ministers were quick to respond to Trump’s tweet, according to news reports, with Saudi energy minister Khalid al-Falih saying there is “not such a thing as artificial prices.”
New York-traded WTI crude futures rose 7 cents, or 0.1%, on Friday to end at $68.40 a barrel by close of trade, after dropping as low as $67.49 after Trump's tweet.
Meanwhile, London-traded Brent crude futures, the benchmark for oil prices outside the U.S., tacked on 28 cents, or nearly 0.4%, to settle at $74.06 a barrel, off a session low of $72.83.
Oil prices notched their second straight weekly gain, with WTI rising about 1.5%, while Brent saw a weekly increase of around 2%.
Both benchmarks hit more than three-year highs on Thursday, as falling U.S. crude stockpiles, geopolitical tension in the Middle East and concerns about supply disruptions in key oil-producing nations supported the market.
In the week ahead, oil traders will await fresh data on U.S. commercial crude inventories on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise.
Comments from global oil producers for additional signals on whether they plan to extend their current production-cut agreement into next year will also remain on the forefront.
Geopolitics will also likely keep investors on their toes this week.
Ahead of the coming week, Investing.com has compiled a list of the main events likely to affect the oil market.
The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.
The U.S. Energy Information Administration will release its weekly report on oil and gasoline stockpiles.
The U.S. government will publish a weekly report on natural gas supplies in storage.
Baker Hughes will release weekly data on the U.S. oil rig count.