BOE REPORT: Oil declined as an increase in U.S. drilling countered the prospect of OPEC extending an output-reduction deal.
Futures lost as much as 1.1 percent in New York after gaining 0.6 percent last week. Producers added more oil rigs to U.S. fields last week, extending a drilling surge into a 10th month, Baker Hughes Inc. said. Saudi Arabia is ready to extend cuts if supplies stay above the five-year average, Energy Minister Khalid Al-Falih said in an interview on Bloomberg Television.
Oil traded below $50 a barrel last week, near the lowest levels since November, as near-record U.S. crude stockpiles and increasing production weighed on the output reductions by the Organization of Petroleum Exporting Countries and non-OPEC nations. OPEC and its partners should decide in late April or mid-May whether to continue curbs, according to Russian Energy Minister Alexander Novak.
“One of the key drivers will be speculation over whether OPEC will extend its output cut agreement,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “It is a significant factor for markets and if it’s not rolled over it could be quite a bearish development.”
West Texas Intermediate for April delivery, which expires Tuesday, fell as much as 52 cents to $48.26 a barrel on the New York Mercantile Exchange and was at $48.32 as of 2:45 p.m. in Hong Kong. The more-actively traded May contract dropped as much as 1 percent. Total volume traded was about 32 percent below the 100-day average.
Brent for May settlement declined as much as 41 cents, or 0.8 percent, to $51.35 a barrel on the London-based ICE Futures Europe exchange. Prices last week gained 0.8 percent to end at $51.76. The global benchmark crude traded at a premium of $2.53 to May WTI.
U.S. drillers boosted the rig count by 14 to 631 last week, data Friday from Baker Hughes showed. Companies have added 106 machines to fields this year. The nation’s crude output has climbed to 9.1 million barrels a day, the most since February last year, according to the Energy Information Administration.