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NYMEX Crude $ 47.73 DN $.2400
NY Harbor ULSD $1.5025 UP $.0049
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NEWS
Oil prices finished lower Monday, pressured by another weekly rise in the U.S. oil-rig count and uncertainty over whether OPEC will extend its production cuts into the second half of the year.
May West Texas Intermediate crude fell 24 cents, or 0.5%, to settle at $47.73 a barrel on the New York Mercantile Exchange—giving back nearly all of th e nearly 0.6% gain it saw Friday. May Brent crude LCOK7, -0.02% on the ICE Futures exchange in London eased by 5 cents, or 0.1%, to $50.75 a barrel. On Friday, WTI oil rose 0.5%, while Brent gained 0.5%, but each saw weekly losses of 1.7% and 1.9%, respectively.
Five representatives of countries that signed up to the Organization of the Petroleum Exporting Countries output agreement—Kuwait, Algeria, Venezuela and non-OPEC nations Russia and Oman—met in Kuwait on Sunday to review the current levels of compliance. OPEC officials urged members to cut oil production in line with last year’s agreement, and said the compliance committee will meet again in late April to recommend to the cartel whether cuts need to be extended another six months. The gathering “provided only a lackluster statement that stops short of the commitment to rolling over the cuts that many investors hoped to see,” said Enrico Chiorando, a U.K.-based analyst at energy consultancy Love Energy.
Oil prices, however, settled off their worst levels of the session after Mohammed Saleh al-Sada, Qatar’s energy minister, speaking at an event in London Monday, said the agreement should be extended beyond the third quarter of this year, according to a report from the International Business Times. “OPEC members increasingly indicated support for extending the cut beyond the current end date in June,” said Chiorando. “While an extension remains uncertain, OPEC members appear to be largely in favour and will be keen to press ahead if they can secure support from the 11 nonmembers who have aligned themselves with the drive.”
Meanwhile, “growth in U.S. shale production continues to offset OPEC’s efforts,” said Chiorando. A report from Baker Hughes released Friday showed the number of active U.S. oil rigs rose 21 to 652 rigs last week—suggesting the likelihood of a rise in domestic production to come. “With U.S. stockpiles at record levels and new rigs being added every week this year except one, OPEC’s cuts would need to offset this growth as well as further reduce global supply to have the impact on price they are looking for,” said Chiorando.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, also pointed out that the record-high levels of U.S. oil inventories are “not meant to fade under the Trump administration, which is longing for less energy dependency for the U.S.”