Oil prices fell on Wednesday on worries that global supply is climbing as USA inventories rose unexpectedly and Saudi Arabia and other big producers signaled that they may increase output.
Despite Friday's falls, Brent remains more than 15 percent above its level at the start of the year.USA investment bank Jefferies said on Friday that the "crude market is tight and spare capacity could dwindle to 2 percent of demand in 2H18, its lowest level since at least 1984". Fuel inventories also rose.
Crude prices ticked up Thursday, as the market refocused on geopolitical risks to supply in Iran and Venezuela ahead of a meeting of major producers later this month.
Brent was up 45 cents a barrel at $75.83 by 1015 GMT.
Brent was down 40 cents a barrel at $74.97 by 11:42 a.m. USA light crude was down 73 cents at $64.79, after touching a session low of $64.27 a barrel. "The U.S. tried it last time against Iran, but oil prices got to $140 a barrel".
One of the key features of oil markets recently has been the widening discount of US WTI crude versus Brent CL-LCO1=R , which has nearly quadrupled since February to $11.40 per barrel, its steepest discount since 2015.
The group meets in Vienna on June 22 to discuss its supply policy.
The U.S. government has quietly asked Saudi Arabia and some other OPEC producers to increase oil production by about 1 million barrels a day, according to people familiar with the matter.
OUT OF SYNC Despite this, oil markets are not unanimously bullish.
USA investment bank Jefferies said the crude market is tight and spare capacity could dwindle to 2 percent of demand in the second half of 2018, its lowest level since at least 1984.
Three sources have told Reuters Venezuelan state firm PDVSA is considering declaring force majeure on some exports, after plummeting output and tanker bottlenecks at ports.
He told Reuters that he does not believe OPEC will allow the increased production, and warned that oil prices would rise as a result of the Trump administration's sanctions on Iran and Venezuela.
"It's a tug of war between the loss of supply from Venezuela and Iran and the potential output increase from OPEC and USA shale", said Tony Nunan, risk manager at Mitsubishi Corp.
"If the production ceiling will really be lifted...there will be a renewed pressure on Brent", said Tamas Varga, analyst at brokerage PVM Oil Associates Ltd.