Oil extends drop as U.S. drillers return, OPEC sees more supply
Monday September 12, 2016
Futures slid as much as 2.5 percent in New York, after losing 3.7 percent Friday. Rigs targeting crude rose for a second week to 414, the most since February, according to data from Baker Hughes Inc. The Organization of Petroleum Exporting Countries flipped its forecasts for rival supplies in 2017, predicting an increase in output from outside the group instead of a decline. Equity markets in Europe and Asia dropped the most since the aftermath of the Brexit vote in June amid concern about the end of central bank stimulus.
Oil has fluctuated since rallying in August amid speculation OPEC and Russia would agree on measures to stabilize the market later this month. All solutions are possible, Algeria's energy minister said Friday when asked if producers could raise output within the framework of a freeze. A deal to cap production was proposed in February but a meeting in April ended with no final accord. Meanwhile in the U.S., drillers have been adding rigs after slashing costs.
Producers and service companies almost universally gave the impression that they are well-positioned to return to growth mode at much lower prices,†Michael Cohen and Miswin Mahesh, analysts at Barclays Plc, said in a report. Operators in the newest plays stand poised to keep costs low when prices rise.â€
West Texas Intermediate for October delivery lost as much as $1.16 to $44.72 a barrel on the New York Mercantile Exchange and was at $44.76 as of 12:40 p.m. London time. The contract dropped $1.74 to $45.88 on Friday, falling the most since Aug. 1. Total volume traded Monday was about 4 percent above the 100-day average. Prices rose 3.2 percent last week.
Rig count
Brent for November settlement dropped as much as $1.11 to $46.90 a barrel on the London-based ICE Futures Europe exchange, and traded at a $1.58Â premium to WTI for the same month. The global benchmark crude lost $1.98 to $48.01 on Friday, the most since July 13.
For a story on the resilience of U.S. oil production amid low prices, click here.
The U.S. rig count gained by seven last week, boosting the numbers of machines added since the start of July to 84, according to the Baker Hughes data. U.S. crude stockpiles are at 511 million barrels, the highest seasonal level in at least three decades, according to the Energy Information Administration.
Production from outside OPEC will grow by 200,000 barrels a day next year, according to the group, which a ...