Oil slides as traders await evidence on OPEC cuts

London - Oil declined in New York as traders awaited further proof that production cuts by OPEC and its allies, which were extended at a meeting last week, are having an effect.

West Texas Intermediate futures were down 0.8% from Friday’s closing price following the Memorial Day holiday on Monday.

OPEC and Russia’s deal to extend output limits through March was initially met with a sell-off as deeper cuts or a plan for the rest of 2018 weren’t proposed. Saudi Arabia’s Energy Minister Khalid Al-Falih said the strategy is working and stockpiles will drop faster in the third quarter.

US inventories have fallen for seven straight weeks in a sign the production limits may be working, though stockpiles are still above the five-year average. Saudi Arabia plans to reduce exports to the world’s biggest consumer to speed up that decline.

“OPEC has done enough to establish a floor, but at this stage the best they can probably hope for is to see oil hold around these levels,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank in Copenhagen. “We are in a wait-and-see mode. Major fund buying will only be seen once data begins to support.”

West Texas Intermediate for July delivery slipped 41 cents to $49.39 a barrel on the New York Mercantile Exchange as of 13:09. There was no settlement Monday because of the US Memorial Day holiday.

Brent for July settlement lost 73 cents to $51.56 a barrel on the London-based ICE Futures Europe exchange. Prices on Monday rose 14c to $52.29. The global benchmark traded at a premium of $2.14 to WTI.

Oil-market news:

Libya’s oil output has fallen to 750 000 barrels a day after Arabian Gulf Oil, a unit of National Oil known as Agoco, cut output, according to a person with direct knowledge of the matter.

SK Innovation will continue to seek growth opportunities in North America’s unconventional oil, although profit dropped from crude exploration and production operations due to low oil prices, the company said in an emailed statement.

Goldman Sachs equities analysts cut 2017. Brent forecast to $55.39/bbl from $56.76; WTI forecast to $52.92 from $54.80.

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