{"id":3139,"date":"2017-03-22T03:09:26","date_gmt":"2017-03-22T03:09:26","guid":{"rendered":"http:\/\/arabicfxadvisors.com\/english\/?p=3139"},"modified":"2017-03-22T03:09:26","modified_gmt":"2017-03-22T03:09:26","slug":"oil-drops-u-s-drilling-growth-threatens-counter-opec-cuts-21-march-2017","status":"publish","type":"post","link":"https:\/\/arabicfxadvisors.com\/english\/oil-drops-u-s-drilling-growth-threatens-counter-opec-cuts-21-march-2017\/","title":{"rendered":"Oil Drops as U.S. Drilling Growth Threatens to Counter OPEC Cuts – 21 March, 2017"},"content":{"rendered":"

Oil fell as a Libyan port is set to resume shipments and the U.S. drilling revival undermines the potential for OPEC output curbs to rebalance the market.<\/p>\n

Futures dropped 1.2 percent in New York. Saudi Arabian Energy Minister Khalid Al-Falih said\u00a0on March 16 that the kingdom may extend its cuts if supplies stay above the five-year average. A day later, though, data showed the U.S. rig count growing for a ninth week, and a Libya official said Sunday that the Es Sider and Ras Lanuf ports are preparing to restart oil exports.<\/p>\n

U.S. oil prices dipped below $50 a barrel for the first time in 2017\u00a0this month as near-record American stockpiles and rising output weighed on the production reductions by OPEC and its allies.<\/p>\n

While the\u00a0Organization of Petroleum Exporting Countries won\u2019t decide until May whether to prolong the cuts, ministers including Russia\u2019s Alexander Novak will meet this weekend in Kuwait to discuss the deal\u2019s progress. Money managers cut net-long positions on oil by a record.<\/p>\n

“The reopening of the Libyan ports is the reason for today\u2019s drop and the U.S. rig count doesn\u2019t help,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “The drop in net-length is a signal from speculators that the market is vulnerable.”<\/p>\n

West Texas Intermediate for April delivery, which expires Tuesday, fell 56 cents to settle at $48.22 a barrel on the New York Mercantile Exchange.\u00a0The more-actively traded May contract dropped 40 cents to $48.91. Total volume traded was about 4 percent below the 100-day average.<\/p>\n

U.S. Rigs<\/h3>\n

Brent for May settlement slipped 14 cents to $51.62 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude closed at a $2.71 premium to May WTI, the widest since January.<\/p>\n

Futures briefly pared losses after Reuters reported that OPEC producers increasingly favor extending production cuts into the second half of the year.<\/p>\n

“This is probably a short blip,” Michael Cohen, head of energy commodities research at Barclays in New York, said by telephone. “This spread isn\u2019t sustainable. Our forecast is that WTI will go from a $2 discount early this year to a discount of 50 cents in the second and third quarters.”<\/p>\n

U.S. oil drillers boosted the rig count by 14 to 631 last week, data from Baker Hughes showed. They have added 106 machines to fields this year. The nation\u2019s crude output has climbed to 9.1 million barrels a day, the most since February last year, according to the Energy Information Administration. The agency is projected to report that crude stockpiles rose 3 million barrels last week, according to the median response in a Bloomberg survey.<\/p>\n

“We\u2019re in a very precarious position ahead of what should be an important report this Wednesday,” Yawger said. “We finally got an inventory drop in last week\u2019s report but that came with a big drop in imports, that may have been temporary. The market can\u2019t take another 2, 3 or 4 million barrel build without breaking it\u2019s back.”<\/p>\n

Libya\u2019s Es Sider and Ras Lanuf ports will restart shipping oil in one week to 10 days, Jadalla Alaokali, a board member at National Oil Corp., said by phone. The country\u2019s oil output has increased to 646,000 barrels a day from 621,000 on Sunday due to more production from Waha Oil Co., he said.<\/p>\n

Oil-market news:<\/p>\n