Oil capped its steepest weekly loss since March as the International Energy Agency forecast prices will need to fall further to curb excess supplies.
The world remains “massively oversupplied” before markets tighten in 2016 when output growth outside OPEC grinds to a halt, the IEA said in a monthly report Friday.
Crude has given up this year’s gains following China’s equities rout and the turmoil in Greece. Iran, the fourth-largest producer in OPEC, plans to boost crude exports and recapture market share if international sanctions are lifted. Baker Hughes Inc. reported that the number of rigs drilling for oil in the U.S. increased this week, potentially exacerbating the glut.
“Given the oversupply that we still have in the market, it will be hard for oil to rally,” said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. “Fundamentally we may test the $50 area next week. Even if we don’t get a deal with Iran, we still have a supply glut.”
West Texas Intermediate for August delivery fell 4 cents to end at $52.74 a barrel on the New York Mercantile Exchange. Prices slid 7.4 percent this week.
Gasoline slid 2.86 cents, or 1.4 percent, to $2.0165 a gallon.
Brent for August settlement rose 12 cents to $58.73 a barrel on the London-based ICE Futures Europe exchange, down 2.6 percent this week.
The number of rigs drilling for oil increased by 5 this week to 645, the second consecutive gain, oilfield services company Baker Hughes reported today. U.S. oil production swelled to 9.6 million barrels a day in the week ended July 3, according to a July 8 report from the Energy Information Administration, the highest in about 40 years.
There will be no overall production growth outside OPEC next year for the first time since 2008, according to the Paris-based IEA. Growth in U.S. shale oil supplies will stagnate to mid-2016 while output declines in Russia, the adviser said in its first detailed assessment of the year ahead. Global oil demand growth will slow in 2016, the agency predicted.
Talks on Iran’s nuclear program were deadlocked as interlocutors from the Islamic Republic argued over persistent differences, including lifting restrictions on arms sales. Friday morning was the last chance to qualify for a 30-day review in the U.S. Congress.
The U.S. State Department said in an e-mail Friday that it’s taking the necessary “technical” steps to continue negotiations through July 13. An agreement would be subject to 60 days of scrutiny, pushing back the date when Iran could qualify for sanctions relief, its main objective.
Iran’s plan to sell more oil is still a long way off, Goldman Sachs Group Inc., Bank of America Corp. and Societe Generale SA said last week. Its goal of boosting exports by 50 percent would require an extra 500,000 barrels a day of production, which the banks predict will take six to 12 months.
France praised a package of measures proposed by Greece in return for a 53.5 billion-euro ($59.4 billion) bailout as the German government withheld judgment, saying it will wait for creditors to make a first assessment.
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The responses allow the package of spending cuts, pension savings and tax increases to go to the next stage after it was submitted to creditor institutions late on Thursday. Euro-area officials will examine the proposals in Brussels on Friday, while the Greek parliament takes it up later the same day.