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Oil starts the week with heavy losses as U.S. drilling weighs

Published 03/20/2017, 06:13 AM
© Reuters.  Oil starts the week with heavy losses
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Investing.com - Oil prices struggled near the lowest level since the end of November on Monday, as rising U.S. shale production continued to feed concerns about a global supply glut.

The U.S. West Texas Intermediate crude May contract shed 65 cents, or around 1.3%, to $48.66 a barrel by 6:10AM ET (10:10GMT). The U.S. benchmark hit its weakest since November 30 at $47.09 on Tuesday last week.

Elsewhere, Brent oil for May delivery on the ICE Futures Exchange in London dipped 61 cents to $51.15 a barrel. The global benchmark fell to $50.25 last week, its cheapest since November 30.

Both benchmarks were on track for their ninth loss in the past 11 sessions.

Data from oilfield services provider Baker Hughes on Friday revealed that the number of active U.S. rigs drilling for oil rose by 14 last week, the ninth weekly increase in a row.

That brought the total count to 631, the most since September 2015, underlining concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.

OPEC and non-OPEC producers such as Russia agreed in November last year to reduce output by almost 1.8 million barrels per day to 32.5 million for the first six months of 2017, but so far the move has had little impact on inventory levels.

OPEC's latest monthly report showed global oil stocks in January rose to 278 million barrels above the five-year average.

Kuwait is scheduled to host a ministerial meeting on March 26 comprising both OPEC and non-OPEC members to review compliance with the output agreement and to discuss whether cuts would be extended beyond June.

A poll of market analysts showed on Friday that OPEC will have to extend its oil output curbs beyond June as a revival in crude production outside the group, specifically in the U.S., may scupper its efforts to erode an overhang of unused inventory.

Elsewhere on Nymex, gasoline futures for April declined 0.8 cents, or 0.5%, to $1.585 a gallon, while April heating oil dipped 1.3 cents to $1.495 a gallon.

Natural gas futures for April delivery declined 3.9 cents to $2.909 per million British thermal units.

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