Brent crude prices held below US $60 a barrel, near a 5-1/2-year low, on Friday as a global oversupply of oil showed little sign of receding, even as companies cut upstream investments for 2015.
Oil prices were on track for a fourth straight week of declines after members of the Organization of the Petroleum Exporting Countries (OPEC) in November decided against cutting oil production in response to a drop of nearly 50 per cent in prices since late June.
Brent crude for February delivery was up 11 cents at US $59.38 a barrel by 12:25 pm. The contract had settled down US $1.91 on Thursday, after trading at an intra-day high of US $63.70 a barrel in a volatile session.
"Following the long and steep decline in oil prices, we have seen some buying interest in recent days," said Ken Hasegawa, commodity sales manager of Newedge Japan. "But there is still a lot of selling pressure."
Oil companies have been announcing cuts in exploration and capital spending as the slump in crude prices makes projects uneconomical.
"But for now there is no significant halt in production and no change to the supply and demand situation," said Hasegawa, adding that oil prices could still go lower.
Besides the already announced US $9-billion in spending cuts, energy consultancy Wood Mackenzie forecasts that in order to maintain debt levels, oil companies will need to reduce spending in 2015 by another US $170 billion (or 37 per cent) from 2014 if crude oil prices remain around their current level.
At US $60 a barrel, only three of the top 40 international oil companies generate sufficient free cash flow to cover spending, including distributions to shareholders, Wood Mackenzie said.
US oil output is forecast to grow by 800,000 barrels per day (bpd) in 2015, down from 1.6 million bpd this year, Credit Suisse analysts said in a note.
US crude for January delivery, which expires after Friday's settlement, was up 44 cents at US $54.55, after rising to a session high of US $55.50 in earlier trading.
Saudi Arabia's powerful oil minister said on Thursday OPEC could not cut oil output without the support of other big producers and attempts to get them on board had not worked.
Ali al-Naimi said it was impossible for the cartel to cut alone to reverse the oil price slump, which he called temporary, when others were pumping more, saying that could lead to loss of market share, and with no guarantee of supporting prices.
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