US oil prices edge up from 6 and 1 / 2 year low

US oil prices rallied a bit Friday in a technical bounce after closing at the lowest level in six and a half years in the prior session.

US benchmark West Texas Intermediate for September delivery added 27 cents at $42.50 a barrel on the New York Mercantile Exchange.

European benchmark Brent oil for delivery in September dipped 19 cents to $49.03 a barrel in London.

Citi Futures analyst Tim Evans said Market fundamentals "remain soft" with most observers concluding the market will become even more glutted in the period ahead.

US oil producers added two more rigs to 672 for the week ending August 14, according to Baker Hughes, in a sign that oil production will likely linger at high levels despite lower crude prices.

Adding to the downward pressure has been a "clearly bearish" outage at a BP refinery in the Midwestern state of Indiana, depressing crude demand, said Andy Lipow, head of Houston consultancy Lipow Oil Associates.

Also Friday, the Department of Commerce confirmed that it approved crude exports from the US to Mexico in exchange for an unspecified "similar" quantity of Mexican crude, a senior administration official said.

Lipow said the move could lead to the export of 100,000 barrels of crude from heavily-supplied areas of the US and would be "supportive" of prices. The policy could also be "another crack in the wall" to permit oil exports, he said.

But Matt Smith, director of commodity research at ClipperData, said Friday's rise in US prices was primarily technical rather than a response to news of the US-Mexico oil swap. However, a full-fledged lifting of the US oil export ban would be impactful, he added.

"It is a newsworthy development but it's not necessarily a price mover at this point," Smith said.