London — Crude oil futures regained ground after early losses on Friday, but the US benchmark is set for a second consecutive week of declines as US oil output comes close to matching that of top producer Russia.
North Sea Brent crude’s premium over West Texas Intermediate (WTI) futures remained near three-year highs above $10 a barrel, having surpassed $11 on Thursday.
The premium has doubled in less than a month, as a lack of pipeline capacity in the US has trapped a lot of output inland.
US crude production has been rising to record levels since late 2017. In March it jumped 215,000 barrels per day to 10.47-million barrels per day, a new monthly record, the Energy Information Administration said on Thursday.
“The WTI/Brent spread is wide far down the curve and apparently not reflecting the notion that easing infrastructural constraints and slower US supply growth should begin to reconnect both markets in the medium term,” JBC said in a note.
WTI gained 11 US cents to stand at $67.15 a barrel by 8.20am GMT, bouncing off a session low of $66.81 and having fallen almost 2% on Thursday.
Global benchmark Brent, little changed in the previous session, was up 12c at $77.68 per barrel.
For the week, WTI was on track for a 1% fall, adding to last week’s near 5% decline and shrugging off a 3.6-million-barrel drop in US crude stockpiles last week.
Brent was set to rise 1.6% for the week, widening the spread between the two benchmarks.
Sources said last week that Saudi Arabia, the effective leader of Opec, and Russia were discussing boosting output by about 1-million barrels per day to compensate for losses in supply from Venezuela and to address concerns about the effect of US sanctions on Iranian output.
This pushed Brent to a three-week low below $75 a barrel on Monday. Brent recovered later in the week, however, when a Gulf source flagged that any rise in production would be gradual.
Russia would be able to raise its oil output within months to levels last seen before a global production-cutting deal took effect if there is a decision to unwind the pact, a Russian energy ministry official said.