Crude prices rose on Friday as energy producers continued to cut the number of rigs drilling for oil in the United States and Canada. Both Brent and the U.S. crude benchmarks, however, remained on track for their third straight week of losses as global production shutdowns failed to keep pace with the collapse in demand caused by the coronavirus pandemic.
U.S. oil settled 44 cents, or 2.67%, higher at $16.94 per barrel, after surging nearly 20% in the previous session. Brent crude traded 32 cents, or 1.5%, higher at $21.65. Each one traded in negative territory at certain points throughout the trading session.
U.S. energy firms cut the most oil rigs in a month in April since 2015, according to energy services firm Baker Hughes Co . In Canada, drillers slashed the number of active oil and gas rigs to a record low.
The oil market has experienced unprecedented turbulence since U.S. prices fell into negative territory on Monday for the first time ever and international benchmark Brent sank to two-decade lows.
Investors have sold oil aggressively since early March, in response to a 30% collapse in demand due to the pandemic.
This week's declines will mark the eighth week of losses out of the last nine weeks.
Storage is quickly filling worldwide, which could necessitate more production cuts, even after the Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed to cut output by 9.7 million bpd earlier this month. The global economy may still see a record contraction this year.
"Despite the measures taken by OPEC, oil producers in various countries should be aware that they may be called to take more drastic measures," Diamantino Azevedo, Angola's resources and petroleum minister, told state news agency ANGOP on Friday. Angola is a member of OPEC.
Russia plans to halve oil exports from its Baltic and Black Sea ports in May according to the first loading schedule for crude shipments since it agreed this month along with other major oil producers to cut output.
Continental Resources Inc, the largest oil producer in North Dakota, has halted most of its production in the U.S. state and notified some customers it would not supply crude, people familiar with the matter said.
But with global storage space filling fast and oil demand shrinking by around 30%, those shut-ins are too little to rebalance the market. Onshore oil storage is currently filled to nearly 85% capacity, according to energy research firm Kpler.
In China, where the coronavirus outbreak started late last year, analysts said fuel sales should pick up in the second quarter as Beijing eases curbs to contain the pandemic.