Oil declines as US drillers boost rigs

Sydney - Oil declined as an increase in US drilling countered the prospect of OPEC extending an output-reduction deal.

Futures lost as much as 1.1% in New York after gaining 0.6% last week. Producers added more oil rigs to US fields last week, extending a drilling surge into a 10th month, Baker Hughes said. Saudi Arabia is ready to extend cuts if supplies stay above the five-year average, Energy Minister Khalid Al-Falih said in an interview on Bloomberg Television.

Oil traded below $50 a barrel last week, near the lowest levels since November, as near- record US crude stockpiles and increasing production weighed on the output reductions by the Organisation of Petroleum Exporting Countries and non-OPEC nations. OPEC and its partners should decide in late April or mid-May whether to continue curbs, according to Russian Energy Minister Alexander Novak.

“One of the key drivers will be speculation over whether OPEC will extend its output cut agreement,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “It is a significant factor for markets and if it’s not rolled over it could be quite a bearish development.”

West Texas Intermediate for April delivery, which expires Tuesday, fell as much as 52 cents to $48.26 a barrel on the New York Mercantile Exchange and was at $48.32 as of 08:45.

The more-actively traded May contract dropped as much as 1%. Total volume traded was about 32% below the 100-day average.

US rigs

Brent for May settlement declined as much as 41c to $51.35 a barrel on the London-based ICE Futures Europe exchange. Prices last week gained 0.8% to end at $51.76. The global benchmark crude traded at a premium of $2.53 to May WTI.

US drillers boosted the rig count by 14 to 631 last week, data on  Friday from Baker Hughes showed. Companies have added 106 machines to fields this year. The nation’s crude output has climbed to 9.1 million barrels a day, the most since February last year, according to the Energy Information Administration.

Oil-market news:

OPEC and its allies improved their collective compliance to cuts last month as deeper reductions from members offset weaker implementation from other producers, according to two delegates familiar with the conclusions of a meeting in Vienna on Friday.

Libya’s crude shipments from Es Sider and Ras Lanuf ports to restart in one week to 10 days, Jadalla Alaokali, board member at National Oil, said by phone.

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