Brent oil is once again struggling to keep prices over $53 per barrel. The main obstacle is the continuous surge in U.S. crude oil production and OPEC and non-OPEC’s dwindling conformity level to the oil cut pact. Further falls in U.S. oil inventories and recent declines in the U.S. oil rig count along with a relatively weak U.S. dollar index failed to sustain prices over the $53 level. Meanwhile, the tropical Harvey storm, which has recently hit Texas, not only has devastated infrastructure in its path but has also hit oil production and refineries in around Texas.

Oil markets last week will be reviewed based on the U.S. dollar index, weekly American Petroleum Institute (API) and Energy Information Administration (EIA) oil inventories, weekly EIA field production of crude oil in the U.S. and the weekly U.S. Baker Hughes rig count.

Brent oil price started the week with a drop to $51.66 due to rising U.S. crude oil production, despite the third five-count decline as reported in the U.S. Baker Hughes data from the previous week and the decrease in the U.S. dollar index. On Tuesday, the price increased to $51.87 through a weekly fall of 3.59 million barrels in U.S. oil inventories as detailed in the weekly API report, despite the rise in the U.S. dollar index.

It continued its ascent to $52.57 on Wednesday through a drop in the U.S. dollar index and a fall of 3.32 million barrels in U.S. commercial oil inventories, according to the Energy Information Administration’s (EIA) weekly report. This increase was despite the rise in U.S. crude oil production of 26 thousand barrels per day to 9.28 million barrels per day for the week ending Aug. 18, as reported by the U.S.’ weekly EIA crude oil production report. 

However, the price declined to $52.04 impacted by a rise in U.S. crude oil production, a stronger U.S. dollar index and lower conformity levels of OPEC and non-OPEC countries to the oil cut agreement.

Brent oil prices recovered and settled at $52.41 at the end of the week with a decline in the U.S. dollar index as well as a four-count decline in the weekly U.S. oil rig count as per Baker Hughes data.

In brief, last week Brent oil slightly decreased to $52.41 from $52.72 mainly due to rise in U.S crude oil production.

The Joint OPEC and Non-OPEC Ministerial Monitoring Committee (JMMC) revealed a conformity level for July of 94 percent - indicating that conformity is diminishing month by month. However, the committee expressed satisfaction with the results and shared their belief in reaching full adherence to the agreement, and accordingly, a market rebalance.The success of the oil cut agreement is becoming questionable because of the lower conformity levels of late, which could result in price declines in the following months.

Although the Harvey storm took some oilfields out of commission while some refineries in Texas failed to operate, surprisingly the oil market did not react with increased prices because of reduced supplies. This suggests that oil prices could increase in the upcoming days.

U.S. dollar weakness is persisting with ongoing political disputes in Trump’s administration and with the U.S. Fed Chair Yellen’s historic and last speech during the central bank's annual conference in Jackson Hole, Wyoming. Her speech disappointed traders and sent the dollar down.

This week, fluctuations in the Brent oil price between $50 and $53 may continue provided further draws in U.S. oil inventories continue. Additionally, curtailment in crude oil production would be needed if prices are to reach over $53.

- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.