Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil slips on OPEC cut extension doubts, Russia output worries

Published 24/04/2017, 20:59
Updated 24/04/2017, 20:59
© Reuters. A pump jack used to help lift crude oil from a well in South Texas? Eagle Ford Shale formation stands idle in Dewitt County Texas

© Reuters. A pump jack used to help lift crude oil from a well in South Texas? Eagle Ford Shale formation stands idle in Dewitt County Texas

By Devika Krishna Kumar

NEW YORK (Reuters) - Oil prices slipped nearly 1 percent on Monday, extending last week's decline, on lack of confirmation that OPEC will extend output cuts until the end of 2017 and as Russia indicated it can lift output if the deal on curbs lapses.

Russian oil output could climb to its highest rate in 30 years if the Organization of the Petroleum Exporting Countries and non-OPEC producers do not extend a six-month supply reduction deal beyond June 30, according to comments by Russian officials and details of investment plans released by oil companies.

"We think an extension is highly likely, with a growing OPEC consensus in support of that policy, but the market seems to be attributing last week's decline to the lack of a firm agreement," Tim Evans, Citi Futures' energy futures specialist, said in a note.

"In our view, the drop had more to do with correcting the prior excess optimism and speculative excess, than with any shift in the underlying fundamental scenario, but those requiring a fundamental explanation ... will focus on OPEC or U.S. production growth instead."

Last week, prices plummeted about 7 percent partly on signs that rising U.S. shale production offset efforts by OPEC and other producers to cut output by almost 1.8 million barrels per day (bpd) in the first half of the year.

Brent crude futures (LCOc1) ended the session 36 cents lower at $51.60 per barrel after hitting a session high of $52.57 a barrel.

U.S. West Texas Intermediate (WTI) crude oil futures (CLc1) dropped 39 cents to settle at $49.23 a barrel, after reaching a high of $50.22 a barrel earlier in the day.

"From a technical perspective, the June WTI contract has now broken another key Fibonacci level, specifically the 61.8 percent retracement of the rally from March 22 to April 12," said David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington.

"In addition we are close to breaking a long-term uptrend line that has been in force since early August of last year."

Traders and brokers also noted that crude markets were lower despite a relief rally over the French election, with the U.S. dollar (DXY) noticeably weaker. [USD/] This reflects the prevailing bearish market sentiment, they said.

U.S. gasoline futures (RBc1) fell about 1.4 percent, leading the energy complex lower, as refiners ramp up production after seasonal maintenance and on demand worries, traders said.

Rising U.S. drilling and production have dampened any oil price rally. Investors cut bullish bets on rising ICE Brent crude futures and options by 9,811 contracts to 427,433 lots in the week to April 18.

In the week to April 21, U.S. drillers added oil rigs for a 14th week in a row, to 688 rigs, extending an 11-month recovery that is expected to boost U.S. shale production in May by the biggest monthly increase in more than two years.

U.S. crude production is at 9.3 million bpd , up almost 10 percent since mid-2016, approaching the level of OPEC's top exporter, Saudi Arabia.

© Reuters. A pump jack used to help lift crude oil from a well in South Texas? Eagle Ford Shale formation stands idle in Dewitt County Texas

(GRAPHIC: Asia's Iranian oil imports http://tmsnrt.rs/2cNidjY)

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.