Oil mixed as Saudi output rises

new york — Oil was mixed on Friday as a Canadian supply outage supported US crude prices, while an increase in production from Opec’s biggest exporter Saudi Arabia pushed Brent lower.

US crude futures gained 86 cents, or 1.2 per cent, to settle at $73.80 a barrel. Global benchmark Brent slipped 28 cents to settle at $77.11 a barrel.

For the week, WTI futures lost about 0.5 per cent after hitting a three-and-a-half-year high on Tuesday, while Brent lost about three per cent. US crude was bullish after official data on Thursday showed inventories at Cushing, the delivery point for US crude futures, fell to their lowest in threeand-a-half years.

at least over the next few weeks, the Brent-WTI spread is going to narrow Andrew Lipow, president of Lipow Associates

That came after an outage at a major Canadian oil sands facility cut regional supply. The outage at the 360,000 barrels per day (bpd) Syncrude facility in Canada has contributed to a sharp reduction in the discount for US crude versus Brent crude over the past month.

The discount has halved to $5.54 a barrel on Friday from $11.57 in early June.

“We’re continuing to see — and I expect the trend will continue — lower inventories in Cushing in July, resulting in a very tight light sweet crude market,” said Andrew Lipow, president of Lipow Associates. “That has been exacerbated by the Canadian Syncrude outage which has resulted in a scramble for supplies in the Midwest. I do expect that at least over the next few weeks, the Brent-WTI spread is going to narrow.”

Brent was being pressured by expectations for higher Saudi and Russia production, which impacts Europe and Asia, where Brent is the benchmark, more than markets dominated by US crude prices.

Saudi Arabia told the Organisation of the Petroleum Exporting Countries that it increased production by almost 500,000 barrels per day last month.

Opec and its allies agreed earlier this month to a modest increase in output to dampen the oil price rally, which hit a three-and-a-half year high.