Aug. 11 (UPI) -- Crude oil prices drifted lower early Friday after a report from the International Energy Agency said the markets were balancing, but it's a stubborn process.
Oil prices rallied early in the Thursday session after the August report from the Organization of Petroleum Exporting Countries showed global demand on the rise, while production from non-member states inched lower. Gains in crude oil prices were quickly erased, however, after Russian oil producer Gazprom boasted of strong production and hinted at a possible acceleration.
Russia is the largest contributor to an OPEC-led effort to balance the market with production declines among non-member states. OPEC economists estimate Russian crude oil production will increase about 1 percent from the expected 2017 average to around 11.24 million barrels per day next year.
The International Energy Agency reported the market was moving toward balance, but global crude oil inventories are still above the five-year average for inventories in the Organization for Economic Cooperation and Development.
"As an exercise, if OECD stocks fell by 500,000 barrels per day until the end of first quarter 2018, when the current output agreements expire, they would still be about 60 million barrels above the five-year average," it reported.
The price of Brent crude oil was lower than Thursday's close by 0.35 percent at 9:20 a.m. EDT at $51.71 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.4 percent to $48.39 per barrel, after opening the session Thursday slightly above $50 per barrel.
The OPEC-led effort is offset in part by some of its own member states. Libya and Nigeria are two members exempt from the agreement on national security grounds, while Iraq has stubbornly agreed to play along.
The IEA reported there would be more confidence in the effort if more parties to the agreement showed a stronger level of resolve. Nevertheless, the market is rebalancing.
"If re-balancing is to be maintained, the producers that are committed to seeing the task through to March 2018 need to convince the market that they are in it together," it warned. "It is not entirely clear that this is the case today."
The report came as Saudi Arabia said it was ready to send more oil to Iraq, after both sides agreed earlier in the week to uphold their commitments.
Meanwhile, the war risk to the market escalated with U.S. President Donald Trump stating through his official Twitter account that military solutions are "locked and loaded" should North Korea act out.
Ongoing crises in OPEC-member Venezuela continue to weigh on the minds of traders.