Oil halts gain near $54 as rising US drilling damps Saudi cuts

Hong Kong - Oil halted its advance below $54 a barrel as an increase in US drilling countered signs Organisation of the Petroleum Exporting Countries (Opec) members including Saudi Arabia are sticking to planned output cuts to stabilize the market.

Futures slid as much as 0.6% in New York after rising 3.2% the previous three sessions.

US drillers added rigs for the 10th straight week to the highest level in a year, according Baker Hughes.

Saudi Arabia is among Opec producers leading a reduction in supply, the group’s Secretary-General Mohammad Barkindo said in an interview with Kuwait’s official news agency.

Oil last year capped its biggest annual gain since 2009 as Opec and 11 other nations agreed to curb output starting January 1 in an effort to trim a global inventory glut. While producers from Iraq to Kuwait say they have started to curb supply, an increase from countries such as Libya - exempt from cuts - could put pressure on prices.

“The oil market has found a temporary equilibrium point and appears content to sit around that level at the moment,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

“We are getting anecdotal evidence of Opec production cuts and that’s enough to hold the market firm.”

West Texas Intermediate for February delivery slid as much as 33 cents to $53.66 a barrel on the New York Mercantile Exchange and was at $53.69 at 1:39 in Hong Kong.

Total volume traded was about 62% below the 100-day average.

The contract rose 23 cents to $53.99 a barrel on Friday to cap a fourth weekly gain.

Rig count

Brent for March settlement lost as much as 29 cents to $56.81 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.25 to March WTI.

US drillers boosted the rig count by 4 to 529 last week, according to data on Friday from Baker Hughes. It’s the highest level since the week ended January 1, 2016.

Companies have added more than 100 rigs since the end of September.
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