By Sabina Zawadzki and David Gaffen
| LONDON/NEW YORK
LONDON/NEW YORK Oil prices were largely steady on Friday, and looked set to finish the week with modest gains after losing almost 10 percent last week on concerns that an OPEC production cut was failing to reduce a global supply overhang.Crude traded in a narrow band this week, with Brent and West Texas Intermediate bouncing in a $2.50 range as investors weighed the impact of the first oil cut from the Organization of the Petroleum Exporting Countries in eight years against rising U.S. shale oil output and high inventories.However, oil has not been able to reclaim the range that prevailed through most of 2017 before last week's rout. Instead of rebounding to $53 a barrel, U.S. crude has remained stuck around $49. Analysts anticipate that regaining the old levels may be difficult without significant drawdown in inventories. The market even failed to rebound after Saudi Arabia Minister Khalid al-Falih said on Thursday the cuts by the OPEC and non-OPEC producers could be extended beyond June if oil stockpiles stayed above long-term averages.
"Neither a weaker dollar nor Saudi talk of doing 'whatever it takes' to bring inventories down to healthier levels is inspiring much buying," said Timothy Evans, analyst at Citi Futures in New York, in a note Friday.Evans noted that market sentiment may further weaken in the absence of a strong rebound to the previous range. Volume was low on Friday, with fewer than 100,000 futures contracts on CME changing hands by 11:03 a.m. EDT (1603 GMT), after the market's busiest stretch of the year last week. By 11:15 a.m. (1515 GMT), Brent crude edged down 7 cents at $51.67 a barrel while U.S. light crude fell 3 cents to $48.72. Both benchmarks were on track for gains of about 20-30 cents.
Six of 10 analysts polled by Reuters said they believed OPEC would prolong its output reductions past the deal's six-month duration.Saudi Arabia has cut output by more than its share under the November 2016 deal. Some ask whether Riyadh has the appetite to continue while several OPEC and non-OPEC states fail to comply and as shale production is expected to rise.
"Saudi Arabia is not prepared to shoulder all of the burden of rebalancing the oil market and if others fail to cooperate then it may prove to be difficult for OPEC to extend cutbacks beyond the middle of this year," said Dan Smith of Oxford Economics, in a note to clients. OPEC and non-OPEC members agreed last year to cut output by a combined 1.8 million barrels per day (bpd) in the first half of 2017. But OPEC's monthly report showed global oil stocks rose in January to 278 million barrels above the five-year average.The market will seek more direction from data due later on Friday. The Baker Hughes weekly rig count will indicate activity in the U.S. shale industry, and the U.S. Commodity Futures Trading Commission releases calculations of net long and short positions in the crude futures market. (Additional reporting by Jane Chung; Editing by Marguerita Choy and Dale Hudson)
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Updated Date: Mar 17, 2017 22:45 PM