Tuesday, 24 January 2017
Oil Slips As U.S. Drilling Recovery Offsets OPEC-Led Cuts
Oil prices fell 1 percent on Monday as signs of a strong recovery in U.S. drilling largely overshadowed news that OPEC and non-OPEC producers were on track to meet output reduction goals. Ministers representing members of the Organization of the Petroleum Exporting Countries and non-OPEC producers said at a meeting in Vienna on Sunday that of the almost 1.8 million barrels per day (bpd) they had agreed to remove from the market starting on Jan. 1, 1.5 million bpd had already been cut.
"Despite comments over the weekend at the OPEC compliance meeting that cuts in OPEC/non-OPEC production were ahead of schedule, a sharp rise in U.S. rig counts and talk of large increases in capital spending seem to be souring the bullish mood," said Phil Flynn, analyst at Chicago-based brokerage Price Futures Group.
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U.S. drillers added the most rigs in nearly four years last week, data from energy services company Baker Hughes showed on Friday, extending an eight-month drilling recovery. Brent crude settled down 26 cents, or 0.5 percent, at $55.23 a barrel.
U.S. crude futures closed the session at $52.75 a barrel, down 0.9 percent, or 47 cents. The front-month Brent crude spread, however, tightened to the narrowest discount, or contango, in more than four months amid signs of tightening supplies and firm Asian demand.