Singapore - Oil prices dipped on Friday as the market refocused on a persistent fuel supply overhang that is not expected to abate unless OPEC and other producers make a significant cut to their output.
International Brent crude oil futures were trading at $45.77 per barrel at 07h43 GMT, down 7 cents from their last close.
US West Texas Intermediate (WTI) crude oil futures were trading down 10 cents at $44.56 per barrel, weighed down by weakening US demand.
“This week, both US gasoline and diesel demand decelerated on a four-week rolling average basis to -2.1 percent year-on-year and +0.9 percent, respectively,” US investment bank Jefferies said on Friday.
Traders said that an ongoing crude and refined product supply overhang that has dogged markets for over two years was dragging on markets.
“Crude oil prices fell as the focus returned to supply growth. The IEA suggested prices may continue to retreat amid relentless supply growth unless OPEC makes significant supply cuts,” ANZ bank said on Friday.
The supply overhang could run into a third year in 2017 without an output cut from the Organisation of the Petroleum Exporting Countries (OPEC), while escalating production from other exporters could lead to relentless supply growth, the International Energy Agency said on Thursday.
In its monthly oil market report, the group said global supply rose by 800 000 barrels per day (bpd) in October to 97.8 million bpd, led by record OPEC output and rising production from non-OPEC members such as Russia, Brazil, Canada and Kazakhstan.
In Africa, Nigeria is working out new oil and gas policies to attract more private investors and boost crude production by 500 000 bpd by 2020, state firm NNPC said on Thursday.
The IEA kept its demand growth forecast for 2016 at 1.2 million bpd and expects consumption to increase at the same pace next year, having gradually slowed from a five-year peak of 1.8 million bpd in 2015.
Beyond oversupply, a surging dollar following the initial shock of Donald Trump's US presidential election win also put pressure on prices, traders said.
Because oil and refined products are traded in dollars, its import costs rise for any country using other currencies at home, potentially crimping demand.
REUTERS