(Bloomberg) -- A rising U.S. rig count and continuing uncertainty over OPEC’s strategy to extend supply cuts pushed oil prices lower following a week in which they hit their highest close in more than two years.
Futures slid as much as 2.4 percent in New York after rising 1.6 percent Friday to the most since June 2015. OPEC and Russia, partners in the oil-cuts deal, have crafted the outline of an agreement to extend curbs to the end of next year, according to people involved in the discussions. But doubts remain over the size of the reductions after the current accord expires in March, as well as which exit strategy the group will adopt. Meanwhile, drillers targeting crude in the U.S. added nine rigs last week.
"What we’re seeing is cold feet heading into the OPEC meeting," said Ashley Petersen, lead oil market analyst at Stratas Advisors in New York.
Oil has advanced about 23 percent since the start of September on speculation the Organization of Petroleum Exporting Countries and its allies will prolong output reductions to drain a global glut. OPEC and Russia are still hammering out crucial details for an extension, the people involved in the conversations said last week. Russia wants the deal to include new language that would link the size of the curbs to the health of the oil market, they said.
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"After exuberance over three weeks now, investors are getting nervous," Petersen said. "That’s going to be the dominant driver regardless of the weekly fundamental data."
West Texas Intermediate for January delivery fell $1.04 to $57.91 a barrel at 11:56 a.m. on the New York Mercantile Exchange. Prices gained 93 cents to $58.95 on Friday, capping a 4.2 percent weekly advance.
Read our OPEC Reality Check to see what’s at stake for each producer
Brent for January settlement fell by as much as 76 cents to $63.10 a barrel on the London-based ICE Futures Europe exchange, after rising 1.8 percent last week. The global benchmark crude traded at a premium of $5.66 to WTI.
Oil-market news:
- Crude inventories in Cushing, Okla., fell 2 million barrels in the week ended Nov. 24, according to a forecast compiled by Bloomberg.
- Global crude inventories are declining and supply and demand are in balance, Amin Nasser, chief executive officer of Saudi Aramco, said Sunday in the eastern Saudi city of Dhahran.
- Iraq’s hitting a couple of speed bumps as it gears up for 2018 oil sales, after making unprecedented moves to sell one-time cargoes this year in addition to supplies under long-term contracts.
- OECD fuel inventories were 140 million barrels above the five-year average in October, down from record of more than 380 million, according to the text of a speech on Monday by OPEC Secretary General Mohammad Barkindo.
