Oil falls below $58 as ring count counters opec curbs extension

Oil dropped below $58 a barrel as investors weighed an increase in US oil drilling rigs against the Organisation of Petroleum Exporting Countries (Opec)’s promise to extend output cuts through the end of next year.

Futures fell as much as 0.9% in New York after adding 1.7% on Friday. Opec and its allies including Russia last week agreed to keep their supply cuts in place and beefed up the extension with the inclusion of Nigeria and Libya.

Executives from three of the biggest independent US drillers said while they won’t increase activity just because prices rise after Opec agreed to prolong curbs, they will continue to grow.

Oil has advanced for three consecutive months through November amid optimism that output cuts by Opec and its partners are helping to balance the market.

Drillers targeting crude in the US added two rigs to 749 last week, the highest level since late September, according to Baker Hughes.

"Even though adding Nigeria and Libya is a positive sign, Opec has basically played all its cards after deciding to extend production curbs through next year," Will Yun, a commodities analyst at Hyundai Futures, said by phone.

"As long as US shale suppliers exist, it will be hard to see further gains in oil prices from now on."

West Texas Intermediate for January delivery was at $57.93 a barrel on the New York Mercantile Exchange at 2:02pm. in Seoul, down 43 cents. The contract gained 96 cents to settle at $58.36 on Friday.

Total volume traded was about 21% below the 100-day average.

Brent for February settlement dropped 36 cents to $63.37 a barrel on the London-based ICE Futures Europe exchange.

Prices added $1.10, to close at $63.73 on Friday. The global benchmark crude was at a premium of $5.43 to February WTI.

Pioneer Natural Resources, Parsley Energy and Newfield Exploration said their emphasis will be on maintaining spending discipline and generating profits, rather than just boosting supply on higher oil prices.

Pioneer plans to boost output from about 300 000 barrels of oil equivalent a day this quarter to more than 1 million by 2026.

Oil-market news:

Money managers have increased their bullish ICE Brent crude oil bets by 11 739 net-long positions to 537 979, the most bullish level in three weeks, the weekly ICE Futures Europe data on futures and options show.

Citigroup remains bearish 2019 with a forecast of about $49 a barrel for Brent as Opec, US, Canada, Brazil and Russia look to add material volumes of supply, which would likely be at a faster growth rate than demand, bank analysts including Ed Morse wrote in a note.