🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

Oil slips below $52 as U.S. drilling, China worries weigh

Published 01/05/2017, 16:26
© Reuters. FILE PHOTO: A worker walks past a pump jack on an oil field owned by the Bashneft company near Nikolo-Berezovka
LCO
-
CL
-

By Alex Lawler

LONDON (Reuters) - Oil edged below $52 a barrel on Monday as rising crude output and drilling in the United States countered OPEC-led production cuts aimed at clearing a supply glut.

U.S. drillers added nine oil rigs in the week to April 28, bringing the count to the most since April 2015, energy services company Baker Hughes said on Friday. Crude output in the United States has hit its highest since August 2015, government data shows.

"The U.S. rig count indicates that there is plenty more to come," analysts at JBC Energy said in a report, referring to the outlook for U.S. production.

Global benchmark Brent crude (LCOc1) for July was down 50 cents at $51.55 a barrel by 1403 GMT. U.S. crude for June (CLc1) was down 44 cents at $48.89 a barrel.

Prices also came under pressure after an official survey showed on Sunday that growth in Chinese manufacturing slowed faster than expected in April, potentially weighing on the outlook for oil demand.

"The moderation in the China PMI (purchasing managers' index) could see commodity prices come under some modest pressure," ANZ bank said in a note.

U.S. output gains are limiting the impact of efforts led by the Organization of the Petroleum Exporting Countries to cut output by almost 1.8 million barrels per day for six months until June to banish a persistent glut.

OPEC and participating non-OPEC countries meet on May 25 to discuss whether to extend the reduction. Given that inventories remain high and prices are half their mid-2014 level, OPEC members including top exporter Saudi Arabia support prolonging the curbs.

Iran's oil minister said on Saturday that OPEC and non-OPEC producers had given positive signals for an extension of output cuts, which Tehran would back.

Despite OPEC's efforts, the oil glut has been slow to shift.

© Reuters. FILE PHOTO: A worker walks past a pump jack on an oil field owned by the Bashneft company near Nikolo-Berezovka

The International Energy Agency said in its latest monthly market report that oil stocks in industrialised countries were about 336 million barrels above the five-year average, a key indicator for OPEC.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.