Meanwhile, data from Baker Hughes Incorporation disclosed that the number of US rigs actively drilling for oil increased by 21 units to 659 rigs in the week ended 24 July. The contract fell 31 cents to $48.14 on Friday, the lowest level since March 31.
Despite the firming of discounts, traders said the market was still seeing ample supplies and will need at least two more weeks to clear the existing surplus in both storage tanks and on vessels, traders said.
Hedge funds and other money managers slashed long bets on US crude futures and options to the lowest level in five years last week, as crude continued to tumble, the US Commodity Futures Trading Commission (CFTC) said on Friday.
According to Adam Longson at Morgan Stanley, crude demand, which had supported prices earlier in the year, is near a seasonal peak and will decline into the fall.
WTI for September delivery was down 4 cents at $48.10 a barrel in electronic trading on the New York Mercantile Exchange.
In Iraq, exports from its southern oilfields are on course for a monthly record, having topped 3 million barrels per day so far this month, according to loading data and an industry source.
Brent North Sea crude for September, the global benchmark, closed at $US54.62 a barrel in London trade, down 65 cents from Thursday’s settlement.
“US producers could be coming to the point where they start considering growth…albeit still in a materially oversupplied oil market, as productivity in the major plays continues to impress”, analysts at Deutsche Bank wrote.
The Federal Reserve Chairwoman told the US congress that the Fed was in line to hike the country’s lending rates this year if the economy expands s it is widely expected to.
Both benchmarks have posted losses this month partly due to a stronger dollar which makes it more profitable for non-US investors to sell commodities and partly on expectations of greater Iranian supply following last week’s deal over Tehran’s nuclear program with world powers.