Oil prices edged higher on Friday but lost ground on the week over concerns of a supply glut, a potential meeting between the US and Russian presidents, and renewed trade tension affecting demand.
Brent, the benchmark for two thirds of the world's oil, settled at $61.29 per barrel, up 0.38 per cent. West Texas Intermediate (WTI), the gauge that tracks US crude, rose 0.14 per cent to settle at $57.54 per barrel.
“The recovery [which began at the start of the week] stalled as WTI prices couldn’t break above $60 per barrel and have since turned flat on the week," said Fawad Razaqzada, market analyst at City Index and Forex.com. "The bearish trend thus remains intact for oil."
Oil is set to notch its longest weekly losing streak since March as concerns of oversupply rise.
US President Donald Trump on Thursday said he was planning to meet his Russian counterpart Vladimir Putin in Budapest, Hungary, soon to discuss ending the war in Ukraine.
Meanwhile, traders were considering a potential halt to India’s Russian oil imports. Mr Trump said Prime Minister Narendra Modi had pledged India would stop buying from Russia, its top oil supplier that accounts for about one third of its crude imports.
However, India said its two main goals were to ensure stable energy prices and secure supply. Russia said it was confident the partnership with India would continue.
Joshua Mahony, chief market analyst at Scope Markets, said: “There is a hope that Mr Trump’s efforts to squeeze Russian income sources could ultimately help drive renewed negotiations to find a resolution to the conflict in Ukraine.
"That would ultimately bring optimism around a potential economic deal between the US and Russia, raising the likelihood that Putin’s crude will be able to flow freely around the world once again.”
Forecasts for a glut have been building after the International Energy Agency this week raised its estimate of global oversupply next year by almost a fifth.
The Energy Information Administration said US crude inventories increased by 3.5 million barrels to 423.8 million barrels last week, compared with analysts' expectations for a 288,000-barrel rise. The bigger-than-expected increase was due largely to lower refining.
The data also showed a rise in US production to 13.636 million barrels per day, the highest on record.
“Investors are concerned about the excess supply hitting the markets, as the Opec+ is gradually releasing some withheld oil supplies to win back market share," Mr Razaqzada said.
The oil producers are aiming for a 1.65 million bpd increase in production by the end of the year.
“It has already increased output by 137,000 bpd from October. Against a backdrop of increasing supplies, it looks like WTI is heading towards the April lows of around $55 again," Mr Razaqzada added.
Meanwhile, investors are focusing on rising trade tension between China and the US that could hurt global economic growth and energy demand for the two biggest crude consumers.
After months of tentative stability, tension flared after Washington expanded technology restrictions and proposed tariffs on Chinese ships entering US ports. China responded with similar actions, outlining tighter export controls on rare earths and other critical materials.
