Oil slips as US drilling gains counter Opec production cuts

London - Oil fell in New York, snapping a three-day gain on signs that Organisation of the Petroleum Exporting Countries (Opec)’s production cuts will stimulate a recovery in US crude production.

Futures lost as much as 1.1% in New York after advancing 3.2% over the previous three sessions.

Opec has delivered 92% of the output curbs it pledged and its partners outside the group have implemented more than half their reduction, Kuwaiti Oil Minister Essam Al-Marzooq said.

In the US, drillers increased the rig count to the highest since October 2015, according to Baker Hughes.

Oil has fluctuated above $50 a barrel since the Opec and 11 other nations started trimming supply from January 1 to ease a global glut.

The market will shift into a deficit during the first half of this year and US crude stockpiles will shrink amid a decline in imports as the curbs take effect, Goldman Sachs Group said last week.

"It’s a dilemma for Opec," Spencer Welch, director of oil markets and downstream at IHS Markit, said in a Bloomberg radio interview.

"They want to help themselves, and by doing that they’re helping others as well. That’s unavoidable. Opec is saying they can’t change what happens in the US, so yes, production will increase."

West Texas Intermediate for March delivery lost as much as 57 cents to $53.45 a barrel on the New York Mercantile Exchange, and traded at $53.44 at 9:51 in London. Total volume traded was about 8% below the 100-day average.

The contract gained 86 cents to $53.86 on Friday. Prices averaged $52.61 last month.

Opec Cuts

Brent for April settlement fell as much as 66 cents, to $56.04 a barrel on the London-based ICE Futures Europe exchange. Prices advanced $1.07, to $56.70 on Friday. The global benchmark traded at a premium of $2.34 to April WTI.

The 11 Opec nations bound by the accord reduced output by 1.12 million barrels a day to 29.93 million a day last month, according to a monthly report from the International Energy Agency published February 10.

Global oil inventories will fall by 600 000 barrels a day during the first half of the year if the group sticks to its agreement, the agency said. Opec is due to release its monthly report Monday, offering the group’s first update on its progress.

Oil-market news:

Russia will decide in April or May on whether to extend the output-cut deal with Opec, Energy Minister Alexander Novak told reporters, according to a report from state news service RIA Novosti.

The United Arab Emirates hopes to see more commitment to the production cuts in the coming months, especially from non-Opec members, Energy Minister Suhail Al-Mazrouei said in Dubai.

Iraq’s will export 3.014 million barrels a day of crude next month, the lowest level since August, according to a loading plan obtained by Bloomberg.