Front-month futures in New York are down 4.7% this week after a
four-day selloff. While a number of producing nations have reached an
initial deal to extend supply curbs past June, according to Saudi
Arabia’s energy minister, data showing rising
US output is prompting concern that those reductions will be
“We are once again seeing the emerging stalemate between OPEC and
non-OPEC cutting efforts on one side and rising US production on the
Ole Sloth Hansen, head of commodity strategy at Saxo Bank in
“We are currently testing the lower end of the range. This
market is unlikely to go anywhere for the foreseeable future.”
Oil’s rally has faltered after three straight weekly gains on
expectations the Organisation of Petroleum Exporting Countries and its
allies will extend its supply reductions. Prices dropped by more than
3.8% on Wednesday after data showed US
crude production rose for a ninth straight week, even as stockpiles
continued to decline from a record.
West Texas Intermediate for
June delivery was at $50.66 a barrel on the New York Mercantile
Exchange, down 5 cents, at 10:53 in London. Total volume traded was
about 37% below the
100-day average. The May contract expired on Thursday down 17c at
$50.27, the lowest close for front-month futures since April 3.
Brent for June settlement slipped 5c to $52.94 a barrel on the
London-based ICE Futures Europe exchange. Prices are down about 5.3% this week. The global benchmark crude traded at a
premium of $2.28 to WTI.
Goldman Sachs said there’s
no fundamental evidence in the oil market to justify the slide, which was driven by technical indicators.
“We view technicals rather than fundamentals as the driver of this
move lower,” Goldman said in an April 20 report, referring to
The US inventory data released the same day was “in
line with expectations,” and the slide accelerated as prices traded
through their 50- and 100-day moving averages, the bank said.
Still, OPEC itself is voicing concern over the global glut it aims to
ease. The group and other nations have
failed after three months of curbs to achieve their target of reducing
global inventories below the five-year historical average, Saudi Oil
Khalid Al-Falih said.
OPEC will decide at a meeting on May 25 whether to
prolong its pledged cuts into the second half.
US crude production rose by 17 000 barrels a day to 9.25 million a day
last week, according to the Energy Information Administration. That’s
the highest since August 2015.
Stockpiles dropped by 1.03 million barrels to 532.3 million.
Gulf Cooperation Council countries agreed to push for an extension to
the OPEC-led cuts in a meeting on Wednesday, Oman Oil Minister
Mohammed Al Rumhy said in an interview in Abu Dhabi.
Libya’s El-Feel oil field is ready to
resume production after a two-year halt in operations that crimped the
OPEC nation’s output, but there’s a problem: It doesn’t have enough
electricity to pump the crude.