Oil prices surged steadied on Thursday, August 3, driven by signs of a tightening U.S. market but weighed down by ample supplies from OPEC producers.
Benchmark Brent crude LCOc1 was up 5 cents at $52.41 a barrel by 1145 GMT. U.S. light crude CLc1 was 5 cents higher at $49.64, Reuters reports.
Strong demand in the United States has been supporting prices. The U.S. Energy Information Administration reported record gasoline demand of 9.84 million barrels per day (bpd) for last week, and a fall in commercial crude inventories of 1.5 million barrels to 481.9 million barrels.
That’s below levels seen this time last year, an indication of a tightening U.S. market.
But traders say high production by the Organization of the Petroleum Exporting Countries is capping prices.
OPEC and other producers including Russia have promised to restrict output by 1.8 million bpd until March 2018 to help support prices and draw down inventories.
Yet OPEC output hit a 2017 high of 33 million bpd in July, up 90,000 bpd from the previous month, a Reuters survey showed earlier this week, led by a further recovery in supply from Libya, one of the countries exempt from a production-cutting deal.
Ample supply is likely to keep a lid on prices, many analysts say.
There are signs that the oil industry has adapted to an era of low prices and can produce and operate at levels that would previously have been uneconomic.
U.S. investment bank Goldman Sachs said this week that the oil industry had successfully adapted to oil prices around $50 per barrel.
