Crude oil prices held their ground in the early stages of Wednesday's trading session as markets tried to make sense of fluctuating supply and demand dynamics.
Brent crude oil for May delivery gained a fraction of a percent from the previous close to trade at $62.61 per barrel. Brent for the week is relatively unchanged, but up more than 10 percent since the start of April.
Recent market reports from the Organization of Petroleum Exporting Countries and the International Energy Agency said global demand for oil may be on the rise. Oil markets in late 2014 faltered as supply far outweighed demand as U.S. crude oil production soared.
The weak market for crude oil, however, has forced energy companies to cut back on spending in exploration and production. Baker Hughes, Halliburton and Schlumberger, three of the largest oil field services companies in the world, all made recent announcements of staffing reductions.
A report this week from ING said U.S. crude oil production of around 9.38 million barrels per day is below the peak rate of 9.42 million bpd for the week ending March 20.
"This is not a large decline in absolute terms, but its existence is an indicator that producer cuts … are resulting in measurable reductions in U.S. oil production," the investment firm said. "With falling production and strong demand, the stage is set for an early, heavy withdrawal season and firm Brent prices in the weeks ahead."
The price for West Texas Intermediate, the U.S. benchmark, was relatively unchanged from the previous close, selling for $56.75 per barrel in early Wednesday trading. WTI is up about 2.5 percent for the week.
Jamie Webster, a research director at IHS Energy, told UPI in response to email questions WTI should have some volatility for the rest of the year and gain only about 4 percent for a full-year 2016 average when compared with Wednesday's price.
The price difference between WTI and Brent, or the spread, may narrow as refiners boost their capacity to process lighter U.S. crudes and domestic production slows, he said Wednesday.
