Oil steadies after week of heavy losses
London (Oct 16) Oil prices steadied on Friday, snapping a week-long decline as investors closed positions at the end of a volatile week that saw prices slide nearly 10 percent on renewed signs a global supply glut was here to stay.
Brent's new front-month December contract LCOc1 was up 25 cents at $49.98 a barrel at 1125 GMT. November Brent expired at $48.71 a barrel on Thursday, down 44 cents day on day.
U.S. crude's front-month November contract CLc1 traded 38 cents higher at $46.76 a barrel.
"Investors holding short positions have already started to take profit ahead of the weekend after four days of decline," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
Strong equities markets also supported gains as European shares extended a rally on Friday, buoyed by bullish Asian and U.S. trading on positive U.S. economic data.
Despite Friday's gains, WTI was set to make its steepest weekly loss in 10 weeks and Brent in eight weeks, after the International Energy Agency predicted the market to remain oversupplied through 2016.
"Even if crude prices go up now, we could be seeing Iranian crude coming back to the market, pushing it down again. I think downward movement is more likely for the rest of this year," said Daniel Ang, an investment analyst at Singapore-based Phillip Futures Pte Ltd.
Some investors pinned hopes for a price revival on forecasts of falling U.S. shale oil production, with output expected to drop the most on record in November, according to the U.S. Energy Information Administration.
Data from the EIA also showed gasoline stocks fell by 2.6 million barrels last week, above analysts' expectations for a 1.7-million barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 1.5 million barrels versus expectations for a 60,000-barrel drop.
Societe Generale analyst Jesper Dannesboe said crude oil was likely to continue range-trading over the coming months.
"We see limited further downside for risk-reversals unless a major geopolitical event takes place," he said.
A meeting of OPEC technical experts in Vienna on Oct. 21 may give indications whether sentiment is shifting within the organization about maintaining production levels as prices remain muted.
Non-OPEC oil producer Azerbaijan confirmed on Friday it had been invited to the meeting but its energy minister would not attend.