Oil dropped below 58 dollars a barrel as investors weighed an increase in US oil drilling rigs against OPEC’s promise to extend output cuts through the end of next year.
Futures fell as much as 0.9 percent in New York after adding 1.7 percent Friday. OPEC and its allies including Russia last week agreed to keep their supply cuts in place and beefed up the extension with the inclusion of Nigeria and Libya. Executives from three of the biggest independent U.S. drillers said while they won’t increase activity just because prices rise after OPEC agreed to prolong curbs, they will continue to grow.
Oil has advanced for three consecutive months through November amid optimism that output cuts by Organization of Petroleum Exporting Countries and its partners are helping to balance the market. Drillers targeting crude in the US added two rigs to 749 last week, the highest level since late September, according to Baker Hughes Inc.
“Even though adding Nigeria and Libya is a positive sign, OPEC has basically played all its cards after deciding to extend production curbs through next year,” Will Yun, a commodities analyst at Hyundai Futures Corporation, said by phone. “As long as US shale suppliers exist, it will be hard to see further gains in oil prices from now on.”
West Texas Intermediate for January delivery was at 57.93 dollars a barrel on the New York Mercantile Exchange at 2:02 pm in Seoul, down 43 cents. The contract gained 96 cents to settle at 58.36 dollars on Friday. Total volume traded was about 21 percent below the 100-day average.
Brent for February settlement dropped 36 cents to 63.37 dollars a barrel on the London-based ICE Futures Europe exchange. Prices added 1.10 dollars, or 1.8 percent, to close at 63.73 dollars on Friday. The global benchmark crude was at a premium of 5.43 dollars to February WTI.
Pioneer Natural Resources Co., Parsley Energy Inc. and Newfield Exploration Co. said their emphasis will be on maintaining spending discipline and generating profits, rather than just boosting supply on higher oil prices. Pioneer plans to boost output from about 300,000 barrels of oil equivalent a day this quarter to more than 1 million by 2026.
Oil-market news:
Money managers have increased their bullish ICE Brent crude oil bets by 11,739 net-long positions to 537,979, the most bullish level in three weeks, the weekly ICE Futures Europe data on futures and options show. Citigroup remains bearish 2019 with a forecast of about 49 dollars a barrel for Brent as OPEC, US, Canada, Brazil and Russia look to add material volumes of supply, which would likely be at a faster growth rate than demand, bank analysts including Ed Morse wrote in a note. – Bloomberg
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