Crude bounces off 3-week lows but upside seen limited

Oil prices moved higher on Friday, bouncing off the previous session’s three-week lows, but gains were expected to remain limited by ongoing converns over rising U.S. production and overall risk-aversion on global financial markets.

The U.S. West Texas Intermediate crude September contract was at $47.19 a barrel by 6:30AM ET (1030GMT), up 10 cents, or around 0.21%, off Thursday’s three-week through of $46.46.

Elsewhere, Brent oil for October delivery on the ICE Futures Exchange in London added 0.5 cents or about 0.1% to $51.05 a barrel, after hitting a three-week low of $50.01 in the previous session.

Crude prices remained under pressure after U.S. government data this week revealed an increase in domestic production to the highest level in over two years.

However, crude oil inventories fell by 8.9 million barrels, according to the EIA figures, the seventh weekly decline in a row.

Oil prices have been under pressure in recent weeks as concern over rising U.S. shale output canceled out production cuts by OPEC and non-OPEC members.

OPEC and 10 producers outside the cartel, including Russia, agreed since the start of the year to slash 1.8 million barrels per day in supply until March 2018 in order to reduce a global supply glut and rebalance the market.

However, so far, the deal has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, as well as a relentless increase in U.S. shale output.

Oil traders were also sensitive to overall risk-aversion on global markets after after a van rammed into pedestrians in a crowded tourist area of Barcelona on Thursday evening, killing at least 13 people and injuring 100 others.

The Islamic State claimed responsibility for the incident.

In addition, market participants continued to focus on current developments in Washington, where ongoing tensions fueled concerns over the U.S. administration’s ability to implement its political agenda.

Eight chief executives quit two business advisory councils on Wednesday, in protest over U.S. President Donald Trump’s controversial remarks on weekend violence in Virginia.

White House Economic Adviser Gary Cohn denied rumors of his possible departure late Thursday. However the rumors underlined growing opposition surrounding Donald Trump, including from within his own political party.

Elsewhere on Nymex, gasoline futures for September gained 0.51% to $1.598 a gallon, while September heating oil rose 0.21%, to $1.585 a gallon.