Oil prices edged lower on Friday but were still near eight-week highs, buoyed by a decline in US inventories and oil cartel Opec’s ongoing efforts to curb production.

Brent crude futures were down 6c or 0.1% at $51.43 a barrel at 2.51am GMT.

US West Texas Intermediate (WTI) crude futures had fallen 5c or 0.1% to $48.99 a barrel.

Both benchmarks rose to their highest levels since May 31 in the previous session, buoyed by a rally in US petrol futures after earlier support from the latest efforts by the Organisation of the Petroleum Exporting Countries (Opec) to cut exports and a sharp fall in US crude inventories.

“Crude oil prices rose further as the focus remained on fundamentals. This week’s better than expected inventory drawdown in the US continued to support prices,” ANZ bank said in a note.

US crude stocks fell sharply — by 7.2-million barrels — in the week to July 21, due to strong refining activity and an increase in exports, according to data from the Energy Information Administration (EIA).

“Following seasonal norms, we expect further declines in crude inventories over August and September,” BMI Research said.

Brimming US crude supplies have been a challenge to Opec-led production cuts to prop up prices.

US crude oil production has been on the rise since mid-2016, but it dropped to 9.41-million barrels a day in the week to July 21, from 9.43-million barrels a day the week before. The decline was mainly due to a fall in Alaskan output, ANZ bank said.

Oanda senior market analyst Jeffrey Halley said the market would watch US rig count data for further signs of slowing drilling activity, as well as potential US sanctions on Venezuela’s oil sector.

“Both developments should be bullish for oil,” he said.

Oil prices have been supported by a further agreement between Opec and some non-Opec members to limit Nigerian oil output and encourage several members to comply with their pledged production cuts.

Since the world’s major oil producers held a meeting in St Petersburg on Monday, crude prices have risen some 6% on expectations of deepening cuts.

Saudi Arabia, Opec’s de facto leader, said it planned to cap crude exports to 6.6-million barrels a day in August, about 1-million barrels a day below the level last year.

Source: businesslive.co.za