Oil prices ended higher last Friday, but suffered a weekly loss for the fifth time in a row. This is the longest run of weekly declines since 2015.
Investors should position for a potential “V-shaped rebound” in crude prices in H2 Citigroup says. While it’s possible oil prices will dip even lower in near-term. Prices below $50 or $55 are not sustainable over time as insufficient global investment will limit new supply. Most analysts see prices rising later in the year and into 2018.
For the week, WTI oil’s August contract ended roughly 4.4% lower. It was down a fifth-straight week—the longest losing streak of its kind since the eight-week fall that ended on August 21, 2015, according to FactSet data tracking the most-active contracts.
Brent crude for August delivery London’s ICE Futures exchange added 32 cents, or 0.7%, for the session to $45.54 a barrel. It fell 3.9% for the week.
Last week, some of the world’s largest producers expressed willingness to stick to output cuts providing support for oil for the session. Prices, however, were still stuck in a bear market, defined as a decline from a recent peak of at least 20%, amid strong U.S. production.
A monitoring committee made up of OPEC members and producers outside the group on Thursday said compliance to the deal reached 106% in May, the highest since the deal was first clinched late last year.
Traders are clearly unconvinced by the cuts that are intended to bring inventories down to their five year average, particularly against the backdrop of rising output from the U.S., Libya and Nigeria.
Concerns have risen that supply and demand are not balancing as quickly as thought.
On Friday, Baker Hughes reported a rise in the number of U.S. rigs actively drilling for oil. The count, which is a rough proxy for the activity in the industry, marked the 23rd consecutive weekly climb, deepening concerns that U.S. output is offsetting the OPEC cuts.
Prices fell earlier last week as data from the Energy Information Administration showed a weekly climb in U.S. crude production. The report, however, also showed that crude stockpiles declined for a second week in a row.