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Production pressures may push oil prices lower to start Friday

Norway adds pressure to market balance sentiment by boasting of higher output for April.

By Daniel J. Graeber
Crude oil prices hold their ground at the start of trading Friday as markets wait for key data on activity in exploration and production. Norway said, however, its output for April was higher than expected. File photo by Monika Graff/UPI
Crude oil prices hold their ground at the start of trading Friday as markets wait for key data on activity in exploration and production. Norway said, however, its output for April was higher than expected. File photo by Monika Graff/UPI | License Photo

NEW YORK, May 20 (UPI) -- Crude oil prices opened relatively flat on Friday on reports of oil-related developments in Libya and higher-than-expected production from offshore Norway.

Crude oil prices have recovered more than 80 percent since dipping below the $30 mark in January. Prices in early 2016 were influenced by talks of a production freeze for Russia and some members of the Organization of Petroleum Countries, though that deal collapsed after Iran said it was determined to regain a market position lost to sanctions. Recent rallies were triggered by production concerns in Canada and Nigeria, as well as sentiment that balance between supply and demand had returned to the market.

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Libya, an OPEC member whose production is far below levels from before civil war, said national forces this week were able to seize control of more than a dozen fields controlled by the Islamic State terrorist group. While Libyan output is low, the move could signal a shift in a campaign targeting terrorist financing.

In Norway, the government said oil production of an average 1.63 million barrels per day in April was 3 percent higher than it expected and 4 percent higher year-on-year.

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Crude oil prices were relatively flat at the open. The price for Brent crude oil was only a fraction of a percent lower to start the day at $48.79 per barrel. West Texas Intermediate, the U.S. benchmark price, moved marginally higher to open at $48.21 per barrel.

Prices could be influenced later in the day Friday after oil services company Baker Hughes releases its weekly data on rig counts. An increase in the number of rigs would suggest the market rebound is supportive of a return to services sidelined by the decline that started 2016.

For April in the United States, industry data from the American Petroleum Institute show crude oil production averaged 8.9 million bpd, a 7.8 percent decline from last year and the lowest level in nearly two years. Consumer demand, meanwhile, rose to its highest level for April on record as lower crude oil prices meant lower retail prices for petroleum products.

The average retail price for a gallon of regular unleaded gasoline in the United State has increased 9 percent since the start of April.

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