Crude oil futures were flat on Friday but fell for the week—caught between larger-than-expected growth in U.S. crude stocks and reports that OPEC members may exercise an option to extend a pact to cut production by six months, according to Bloomberg MarketWatch.
March West Texas Intermediate crude rose 4 cents, or less than 0.1%, to settle at $53.40 a barrel on the New York Mercantile Exchange. The March contract will expire at Tuesday’s settlement. Monday is Presidents Day, a federal holiday for domestic financial markets.
April Brent crude, the global benchmark, added 16 cents, or 0.3%, to end trading at $55.81 a barrel on London’s ICE Futures Exchange.
Many factors are driving oil prices right now, including whether OPEC production cuts will be extended past June and the U.S.’s “ability to ramp up shale production to mitigate the impact of OPEC’s production cuts,” said Bob Silvers, managing director, in charge of energy practice at SSA & Company, a New York-based management consultancy.
Oil prices have traded within a tight range since the start of the year, with investors monitoring the extent to which OPEC members have reduced production. The cartel, along with other key producers including Russia, agreed last year to cut around 1.8 million barrels a day of oil output starting in January.
The deal sent prices around 20% higher, which has provided incentive for producers outside of the pact — including in the U.S. — to increase their output. Industry data attributed compliance with the agreement at nearly 90% in January.
On Thursday, it was reported that OPEC sources said the cartel could extend the six-month deal to cut supply or make more severe cuts if oil stocks don’t drop by around 300 million barrels to the five-year average.
Talk of possibly extending the supply cut pact come at time when U.S. production is showing a strong revival. The EIA forecasts that domestic output to average 9 million barrels a day this year and grow another 500,000 barrels a day next year.
Meanwhile, March natural gas lost 2 cents, or 0.7%, to settle at $2.834 per million British thermal units.