US crude ticks 18 cents higher, settling at $51.47, after Mideast tensions boost crude this week

Key Points
  • Kirkuk flows to Ceyhan are still at around 200,000 bpd, about one-third of normal shipments.
  • Russia's Rosneft signs deal with Kurds to take control of a Kurdish oil pipeline.
  • Global refiners import U.S. oil to make up for OPEC cuts.
An oil pumpjack operates near Williston, North Dakota.
Andrew Cullen | Reuters

Oil prices were mostly flat on Friday in see-saw trade, under pressure from weak U.S. demand but drawing support from a sharp decline in Iraqi crude exports due to tensions in the Kurdistan region.

U.S. West Texas Intermediate (WTI) crude futures ended Friday's session 18 cents higher at $51.47 per barrel and were flat for the week. Brent crude futures, the international benchmark for oil prices, were up 29 cents at $57.52 per barrel by 2:10 p.m. ET (1810 GMT).

"We've continued to see signs that the market needs a steady drumbeat of positive information," said Gene McGillian, director of market research for Tradition Energy. "This week's DOE report where gasoline demand dropped to its lowest since March gave a little pause to that."

Oil exports from Iraq's Kurdistan towards the Turkish port of Ceyhan were flowing at average rates on Friday of 216,000 barrels per day versus the usual flows of 600,000 bpd, a shipping source said.

Iraqi troops regained control of two major oilfields northwest of Kirkuk from Kurdish Peshmerga forces this week, and the oil ministry in Baghdad expects to bring the fields back on stream on Sunday.

In a major development, Russia's biggest oil company, Rosneft, has agreed to take control of Iraqi Kurdistan's main oil pipeline in a $1.8 billion investment.

Olivier Jakob, chief strategist at consultancy Petromatrix, said the deal with Rosneft "makes it a bit harder for Baghdad to do anything against those flows."

Despite the losses on Friday, analysts say the market is on a path towards rebalancing.

"The oil market has moved into modest undersupply and we expect this will persist at least through the end of the year," U.S. investment bank Jefferies said.

U.S. commercial stocks of crude oil have dropped 15 percent from their March records, to 456.5 million barrels, below levels seen last year.

Part of this drawdown has been due to rising exports as a result of the steep discount of U.S. crude to Brent, which makes it attractive for American producers to export their oil.

The U.S. oil rig count fell for a third week in a row, extending a two-month drilling decline, although producers have sharply ramped up bets against a fall in oil prices, which could spur another investment surge.

The oil rig count fell seven to 736 in the week to Oct. 20,the lowest level since June, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.

Additionally, crude futures price curves are in backwardation, which makes it attractive to sell produced oil immediately rather than store it for later dispatch.

Shipping data in Thomson Reuters Eikon shows that overseas U.S. crude oil shipments have soared from virtually zero before the government loosened export restrictions in late 2015 to around 2.6 million bpd in October.

"While outbound shipments recently approached 2 million bpd, our math suggests that physical bottlenecks are unlikely to kick in until waterborne exports approach 3.2 million bpd," RBC Capital Markets said.

— CNBC's Tom DiChristopher contributed to this report.