Oil prices fell on Friday as investors cashed in on a 20-percent rise over the past month, outweighing the impact of crude production cuts in Canada where a huge wildfire has disrupted oil sands operations.
Oil prices were down around one percent in early European trading, with global benchmark Brent prices set for their first weekly loss in five weeks.
“Currently prices are falling even with only few bearish fundamentals,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.
“It seems that investors take profits regardless of the newsflow which should be supportive,” he added.
The dollar, which has a huge impact on greenback-denominated commodities like oil futures, was also on track for a weekly gain. This in turn weighed down oil prices.
At least 690,000 barrels per day of crude production capacity were offline because of the Canadian wildfires, an issue that was not having much influence on the market on Friday.
Adding to the supply outage in Canada is an ongoing decline in U.S. oil output.
Data by the U.S. Energy Information Administration (EIA) shows that U.S. crude oil output has fallen by 410,000 barrel per day this year, and by 800,000 bpd since mid-2015, as producers succumb to a rout that saw prices tumble more than 70 percent between mid-2014 and early-2016.
Analysts said the drop in North American output, combined with disruptions in Latin America, were contributing to a fast erosion of global oversupply that peaked as high as 2 million bpd last year.
“Unplanned oil supply disruptions have been a key element so far this year that have contributed to a tighter oil market than was otherwise expected,” said analyst Guy Baber of Simmons & Co.
Reuters/ Abubakar M.