Oil futures settled lower Friday as investors worried that recent gains in prices, which finished the week more than 3% higher, may encourage crude producers to ramp up output. Prices, however, pared down some of their earlier losses after data on the number of active U.S. rigs drilling for oil showed a decline for an eight straight week.
June West Texas Intermediate crude fell 49 cents, or 1.1%, to settle at $46.21 a barrel on the New York Mercantile Exchange. Prices were trading around $46.06 shortly before the rig count figures. For the week, they finished roughly 3.5% higher. WTI oil posted a decline last week, but saw gains in each of the four weeks before that. July Brent crude on London’s ICE Futures exchange fell 25 cents, or 0.5%, to $47.83 a barrel. It traded around 5.3% higher on the week.
Oil hit fresh six-month highs on Thursday after a report from the Paris-based International Energy Agency said global crude inventories will experience a “dramatic reduction” in the second half of the year on the back of strong demand falling supplies.
Oil prices have gained with global supply “finally slowing down,” said Naeem Aslam, chief market analyst at ThinkForex.
The Organization of the Petroleum Exporting Countries said Friday in a report that shrinking U.S. output and massive cuts to investment in new oil projects will reduce the global oil glut over the course of this year.