Crude oil prices inched into positive territory early Friday, though concerns of lingering weakness sparked a call for extraordinary OPEC action.

"The writing is on the wall for OPEC," Vandana Hari, an industry analyst for Vanda Insights, said in an emailed newsletter. "It needs to cut more."

Members of the Organization of Petroleum Exporting Countries implemented a deal in January with support from a handful of major oil-producing countries like Russia that targeted supply-side strains with managed declines in output. The arrangement established a $50 per barrel floor under crude oil prices during the first quarter of the year, though that floor cracked under pressure from rising output from Libya and Nigeria -- OPEC members exempt from the agreement -- and the United States.

A spokesperson for Austrian energy company OMV told UPI that the company was satisfied with developments there and targeting a production level from its portfolio in Libya of around 10,000 barrels of oil equivalent per day. That comes as Libya officials estimate the situation is ripe for about 1 million barrels per day in production as early as July. Production in Libya is around 830,000 barrels per day.

Hari said that, combined with Nigeria and the United States, those levels all but wipe out reductions in supply elsewhere. Crude oil prices, however, continue to bounce off the seven-month lows recorded earlier this week.

The price for Brent crude oil was up 0.4 percent about half an hour before the start of U.S. trading to $45.42 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.3 percent to $42.88 per barrel.

Vanda Insights attributed some of the trajectory earlier this week to "algorithmic and technical selling."

Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in a daily newsletter that many stocks tied to the oil sector have been downgraded, but this week's slump was likely the seasonal low point.

"While the downgrades are coming fast and furious, it is probably a sign that the market has bottomed out," he said. "The sharp price drop will once again have ramifications for the trajectory of U.S., and to a certain extent, global oil output."

Lower crude oil prices last year curbed spending on exploration and production. Markets will get an indication of the appetite for spending later in the trading day when Baker Hughes publishes weekly rig counts, which offers an indication of exploration and production trends. Substantial, and steady, gains -- particularly in North America -- would signal continued resiliency to a weaker market and potentially add to further supply-side concerns.

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Washington (UPI) Jun 22, 2017
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