Crude oil had its third weekly loss in a month as OPEC and its allies prepared to meet for a review of their production cuts, while swelling US stockpiles indicated the measures are not working yet.
Futures slipped 1.7 percent this week in New York.
US crude output last week continued to expand along with inventories, data from the US government showed on Wednesday.
While OPEC would not formally decide until May whether to prolong a production-cut deal aimed at easing a global glut, officials are meeting this weekend in Kuwait to discuss its progress.
Oil this week slid below US$48 per barrel, the lowest prices since November last year, as the US supply glut and increased drilling activity continued to counter output cuts by OPEC and other producers.
OPEC will extend the cuts if stockpiles are still above their five-year average, Saudi Arabian Minister of Energy, Industry and Mineral Resources Khalid al-Falih said in a Bloomberg interview last week.
“Breaking through US$50 was bearish psychologically,” Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC who helps manage US$17.2 billion, said in an interview. “The probability of OPEC extending the cuts is even higher with prices in the US$40s.”
West Texas Intermediate (WTI) for May delivery rose US$0.27 to settle at US$47.97 a barrel on the New York Mercantile Exchange. The contract is down 1.7 percent from last week’s US$48.78 per barrel.
Front-month futures on Tuesday closed at US$47.34, the lowest settlement since Nov. 29. Total volume traded was about 39 percent below the 100-day average.
Brent for May settlement on Friday rose US$0.24 to US$50.80 per barrel on the London-based ICE Futures Europe exchange. The contract is down 1.9 percent from last week’s US$51.76 per barrel. Prices on Thursday fell to US$50.56, the lowest close since Nov. 30. Brent closed at a US$2.83 premium to WTI.
On Friday, futures climbed in late trading as attention shifted to the weekend summit in Kuwait, according to Bob Yawger, director of the futures division at Mizuho Securities USA Inc in New York.
“It looks like some guys are unloading short contracts ahead of the semi-OPEC meeting this weekend,” Yawger said by telephone.
A five-nation committee established to monitor implementation of the accord, finalized on Dec. 10 last year, are meeting in Kuwait City today. OPEC last month achieved 91 percent of its pledged cuts, while Russia and other allies delivered about 44 percent, according to data from the International Energy Agency.
“We may get some kind of comment out of Kuwait this weekend, but it’s important to remember it’s the compliance monitoring group that’s gathering, so we shouldn’t expect policy to be made,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by telephone.
US crude production last week expanded for a fifth week to 9.13 million barrels per day, the longest run of gains since January last year, according to Energy Information Administration (EIA) data.
Nationwide stockpiles increased by 4.95 million to 533.1 million barrels in the week ended March 17.
Inventories are at the highest level in weekly EIA data compiled since 1982.
“OPEC pushed an extra 1.5 million barrels a day of exports and production really late into last year, that’s the effect we’re seeing now, ” Energy Aspects Ltd chief oil analyst Amrita Sen said in a Bloomberg television interview. “You’re going to start seeing the effects of the cuts pretty much from next week onwards.”
Oil market news:
‧ TransCanada Corp said it has been granted a US permit for the Keystone XL pipeline to the US heartland following approval by US President Donald Trump.
‧ OPEC’s supply cuts are providing a windfall for producers of heavy crude from western Canada and the Gulf of Mexico.
‧ Russia and Saudi Arabia head to this weekend’s OPEC committee meeting as the tortoise and hare of a global deal to cut oil supply, with Moscow sticking to a slow and steady pace, despite Riyadh’s cajoling.
‧ The surge in US drilling is raising costs for Halliburton Co, which now sees first-quarter earnings per share in “low single digits.”
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