By Florence Tan
SINGAPORE (Reuters) -Oil edged up on Friday following three days of declines on worries about excess supply and slowing demand in the U.S., though prices appeared to be headed for a second week of losses.
Brent crude futures rose 21 cents, or 0.33%, to $63.59 a barrel at 0149 GMT. U.S. West Texas Intermediate crude was at $59.65 a barrel, up 22 cents, or 0.37%.
Brent and WTI are set to fall about 2% this week, down for a second straight week, as major global producers increase output.
The price drop is driven by a surprise 5.2 million-barrel U.S. inventory build that reignited oversupply fears, IG Markets analyst Tony Sycamore said.
“This has been amplified by risk-aversion flows, bolstering the dollar and the ongoing U.S. government shutdown, which continues to cloud economic activity,” he added.
U.S. crude stocks rose more than expected on higher imports and reduced refining activity, while gasoline and distillate inventories declined, the Energy Information Administration said on Wednesday.
Oil prices were also pressured by concerns about the effects of the longest government shutdown in the history of the U.S. on the broader economy.
The Trump administration has ordered flight reductions at major airports due to a shortage of air traffic controllers, while private reports are pointing to a weaker U.S. labor market in October.
Sycamore said WTI prices are settled in a $58 to $62 per barrel range in the near term.
“A potential upside catalyst is the U.S. government reopening within a week, though persistent builds and soft demand will limit the rally,” he added.
The Organisation of the Petroleum Exporting Countries and its allies, also known as OPEC+, decided on Sunday to increase output slightly in December. However, the group also paused further increases for the first quarter of next year, wary of a supply glut.
After OPEC+’s decision, Saudi Arabia – the world’s top exporter – sharply reduced prices for its crude for Asian buyers in December, in response to a well-supplied market.
European and U.S. sanctions on Russia and Iran are also disrupting supplies to the world’s largest importers, China and India, providing some support for global markets.
On Thursday, Swiss commodity trader Gunvor said it had withdrawn its proposal to buy foreign assets of Russian energy company Lukoil after the U.S. Treasury called it Russia’s “puppet” and signaled Washington opposed the deal.
(Reporting by Florence Tan; Editing by Thomas Derpinghaus)
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