Oil trades near two-week low as OPEC plans vie with supply gain

HOUSTON (Bloomberg) -- Oil traded near its lowest in two weeks as comments from some OPEC producers that the group will extend output cuts were undermined by signs of rising supply.

Futures were little changed in New York after a gain in U.S. output sparked a decline of 3.8% on Wednesday, the biggest loss since March 8. The first three months of supply curbs have failed to bring inventories below the five-year average, Saudi Arabia’s Energy Minister Khalid Al-Falih said. Libya was said to have reopened its El-Feel oilfield in the west of the country.

“OPEC has no choice but to continue to maintain the cut,” Anas Alhajji, an independent oil analyst, said in a Bloomberg television interview. “U.S. production increased substantially and it’s going to continue to increase. OPEC needs to cut just to maintain prices—the story is no longer about increasing prices.”

Oil has closed lower every day this week, after posting its third weekly gain Friday amid optimism the Organization of Petroleum Exporting Countries will extend the curbs. OPEC will make a decision on whether to prolong the deal at its official ministerial meeting in Vienna on May 25, Secretary-General  Mohammad Barkindo said in Abu Dhabi.

WTI for May delivery, which expires Thursday, was 12 cents lower at $50.32/bbl on the New York Mercantile Exchange as of 1:52 p.m. London time. Total volume traded was about 7 percent above the 100-day average. The contract lost $1.97 to $50.44 on Wednesday, the lowest close since April 3. The more active June futures lost 10 cents to $50.75.

Brent for June settlement slipped 6 cents to $52.87 on the London-based ICE Futures Europe exchange. Prices slid $1.96, or 3.6%, to $52.93 on Wednesday. The global benchmark traded at a premium of $2.12 to June West Texas Intermediate.

U.S. crude production rose by 17,000 bpd to 9.25 MMbpd, the Energy Information Administration said in a report Wednesday. Output has climbed for nine weeks. Nationwide crude stockpiles dropped by 1.03 million bbl to 532.3 million. They were forecast to decrease by 1.4 million, according to a Bloomberg survey.

Oil-market news. Russia is likely to support prolonging the OPEC-led cuts with other nations, according to a Bloomberg survey. Iran will probably be allowed to keep its oil production unchanged if OPEC decides to extend the agreement, Kuwait Oil Minister  Issam Almarzooq said.