Crude oil futures see mixed trade amid concerns over global glut

Crude oil futures settled lower on 22 May, but witnessed mixed trade for the week, amid persisting concerns over a global oil glut.

In addition, a stronger US dollar weighed on dollar-denominated oil.

Brent July contract finished $1.17, or 1.8%, lower at $65.37 a barrel on Friday.

The global benchmark lost 2.1% for the week as a whole.

US July contract finished $1, or 1.7%, lower at $59.72 a barrel on Friday.

WTI edged up by 0.05% for the week.

Analyst Tim Evans at Citi Futures said in a report that the crude oil market was showing some confidence that it will rebalance as demand grows and American shale oil production declines.

But Evans said stronger demand and weaker US oil production are not enough to tighten the market fast enough, adding that materially stronger prices must dictate a drop in Opec supply, which does not appear to be happening.

"We continue to see the market's lack of focus on the level of Opec oversupply in the market, including the lack of apparent profit-taking ahead of a June 5 Opec summit now just two weeks away, as a dangerous condition."

Capital Economics said in a 21 May note: "The steady recovery in oil prices over the past couple of months will clearly be welcomed by the MENA region's oil producers and provides some encouragement for the Gulf countries that their oil strategy is working. However...we don't think that it significantly alters the growth outlook for these economies."

US government data, on 20 May, revealed that supplies fell last week, owing to a temporary decrease in Alaskan output. But production in the lower 48 states did not drop as some had expected it to.