Oil up for seventh session but set for worst first half since 1998
By Karolin Schaps
LONDON (Reuters) – Oil prices climbed for a seventh straight session on Friday thanks to a weaker U.S. dollar in their longest bull run since April but were still set for their worst first-half performance since 1998.
Lingering worries about oversupply have knocked 16 percent off Brent crude so far this year, despite a deal involving OPEC members and some other major producers to curb production.
Brent fell 19 percent in the first half of 1998 and would need to close at $46.01 a barrel or lower on Friday to do worse this year.
Crude hit a 10-month low last week as rises in output revived concerns about global oversupply but data this week showing a temporary dip in U.S. oil production has dented the bearish sentiment.
Benchmark Brent crude futures <LCOc1> were up 26 cents at $47.68 a barrel at 1035 GMT. WTI crude futures <CLc1> were up 37 cents at $45.30 a barrel.
The oil market shrugged off news that production from Libya, one of two OPEC members exempt from the group’s supply deal, had soared above 1 million barrels per day (bpd).
“The strength is driven by the weak dollar but in light of the rising Libyan production it will be temporary,” said Tamas Varga, analyst at London brokerage PVM Oil Associates.
The U.S. dollar <.DXY> fell to its lowest since October in early trading on Friday, giving investors an incentive to buy dollar-denominated commodities such as crude oil.
The rise in oil supplies has led funds to cut long speculative positions in recent weeks.
Reuters’ monthly oil price poll also showed analysts have reduced their price forecasts again, with 2017 average Brent and WTI prices lowered by more than $2 since last month. [OILPOLL]
Bank of America Merrill Lynch analysts cut their forecasts on Friday, saying the rise in output from Libya, Nigeria and U.S. shale fields coupled with weaker demand growth, meant the market would be more oversupplied than previously expected.
“With output set to rise further, our oil supply/demand balances now point to average deficits of 210,000 bpd in 2017 and 90,000 bpd in 2018,” they said in a report.
They cut their forecast for average 2017 Brent crude prices to $50 a barrel from $54 and WTI to $47 from $52.
(Additional reporting by Naveen Thukral in Singapore; editing by David Clarke)