Crude futures settle lower as U.S. supply concerns return

Cornelia Mascio
Marzo 21, 2017

Oil prices tumbled in Monday's trading session, as rising US drilling activity and stable supply from OPEC countries, despite attempts for production cuts, squeezed the already inflated markets. U.S. WTI crude futures lost 0.78 percent, trading down 38 cents to $48.40 per barrel. May Brent crude gave up 29 cents, or 0.6%, to $51.47 a barrel on the ICE Futures exchange in London.

"Sentiment remains bearish towards oil and the fading optimism over the effectiveness of [the Organization of the Petroleum Exporting Countries'] supply cut deal could encourage sellers to attack prices further", he said.

Oilfield services firm Baker Hughes reported Friday, its weekly USA rig count rose by 14 to 631, it was the ninth straight weekly increase, and fuelled concerns that US shale production could dampen OPEC efforts to combat the supply and demand imbalance in the industry.

U.S. oil prices dipped below US$50 (RM221) a barrel for the first time in 2017 this month as near-record American stockpiles and rising output weighed on the production reductions by Opec and its allies. "The seven major oil and gas basins in the country would have an output of more than almost five million barrels a day collectively", it said.

Greg McKenna, chief market strategist at brokerage AxiTrader, said the fall in crude oil prices could be attributed to "the cracks in the Opec/non-Opec deal" with United States shale oil back as the new swing player in production. OPEC was also able to work out a deal with a consortium of non-OPEC producers such as Russian Federation and Venezuela to cut their production. It also expects the cartel to maintain its agreed six-month production quota at around 32.5m barrels per day (bpd) for the rest of the year. The KSA had technically only signed off on cutting production to 10.058 million barrels per day. The country's oil output has increased to 646,000 barrels a day from 621,000 on Sunday due to more production from Waha Oil Co, he said.

In the meantime, Iran has the right to boost oil output by just 90,000 bpd under the terms of the deal to curb excessive production by members of the Organization of Petroleum Exporting Countries (OPEC) and a number of major crude oil producers outside the cartel, including Russian Federation.

Opec will meet 25 May in Vienna, Austria, to decide whether to extend its 1.2m bpd production cut.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE