Oil prices on Friday, February 24, dipped after U.S. crude inventories rose for a seventh week, showing that the market is still struggling to ease oversupply despite many producers’ efforts to rein in production.
Benchmark Brent crude oil LCOc1 was down 30 cents at $56.28 a barrel by 1149 GMT, while U.S. West Texas Intermediate CLc1 dropped by 26 cents to $54.19.
U.S. crude stocks USOILC=ECI rose by 564,000 barrels in the week to Feb. 17, the Energy Information Administration (EIA) said, though the increase was less than the 3.5 million barrels expected by analysts.
The continued rise in U.S. inventories comes as members of the Organization of the Petroleum Exporting Countries, OPEC, and other producers have cut output.
Their joint compliance with a production-reduction deal reached at the end of last year was around 86 percent in January, according to OPEC sources quoting results from a technical committee meeting held this week.
The United States, which is not part of the deal, continues to ramp up production. Analysts at ING said they expect U.S. output to keep rising while prices remain strong enough to encourage further drilling.
“Prices continue to retreat on repeated failure to rise above the upper end of their trading ranges and yesterday’s inventory data also weighs,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
However, signs have begun to emerge that traders are depleting storage levels that soared while oil prices were weak, Reuters reports.
In the United States, traders are draining the priciest storage tanks as strengthening markets make it unprofitable to store for future sale and as cuts in global production open export opportunities.
