Oil prices continue sliding as production limit optimism fades

Oil prices continue sliding as production limit optimism fades

Crude prices dipped over a percent on Monday, as investors lose confidence in oil following strong drilling data from the United States and pessimism about OPEC-led output cuts.

"Speculative investors have thrown in the towel it seems. We've got record selling in the week ending March 14, and the bleeding has not stopped yet," said Carsten Fritsch, senior commodities analyst at Commerzbank in Frankfurt, as quoted by Reuters.

"The continued increase in US oil rigs adds to the bearish sentiment," he added.

Brent crude was down 58 cents at $51.18 per barrel, while US benchmark WTI slid 74 cents to $48.

In the US, drillers added 14 oil rigs in the week to March 17, according to Baker Hughes. At 631 rigs, this is the biggest count since September 2015. This indicates the US shale oil industry, hit by low energy prices, is returning to the market. The recovery is likely to see the biggest increase in shale production in six months in April.

The data from the US thwarts the Organization of the Petroleum Exporting Countries (OPEC) deal with Russia and other producers to cut production to prop up prices.

The cartel spent two years prioritizing export volume over prices to corner the market and hit the booming American oil industry, but was forced to cut production as lower earnings led to a record budget deficit.

“It was obvious that with a reversal in prices, the US shale production was going to pick up. But the magnitude of the improvement was really not known,” said one Gulf delegate, as quoted by the Financial Times.

At a Vienna meeting in May, OPEC will decide on whether to ditch, continue or widen production cuts.

Oil prices were also hit by information from Libya, which is exempt from the cartel’s deal due to fighting in the country. The Libyan government regained control of two key oil ports, Es Sider and Ras Lanuf, which can export up to 600,000 barrels per day.

Reacting to the oversupply, traders cut net long positions in oil, the biggest cut on record, according to the US Commodity Futures Trading Commission (CFTC) data compiled by Reuters.



Add Comment

all comments

  Other news

more
U.S. pets are getting fatter, according to new report

U.S. pets are getting fatter, according to new report..

27-Jun, 04:36

A few extra pounds can make pets uncomfortable and cause a slew of health...

‘The most terrifying 15 minutes of my NYC life’: Subway train derails, passengers evacuated

‘The most terrifying 15 minutes of my NYC life’: Subway train derails, passengers evacuated..

27-Jun, 13:37

Passengers were evacuated through dark subway tunnels after a New York...

Muslim girls complain of Polish racism on Holocaust study trip

Muslim girls complain of Polish racism on Holocaust study trip..

27-Jun, 11:01

German Muslim schoolgirls who went on a visit to Holocaust memorials in...

Grenfell Tower victim's name wins Philip Pullman auction

Grenfell Tower victim's name wins Philip Pullman auction..

27-Jun, 17:06

A character in a new Philip Pullman book is to be named after a teenager...

Anti-Putin activist has antiseptic thrown in his face while campaigning

Anti-Putin activist has antiseptic thrown in his face while campaigning..

20-Mar, 09:24

Russia’s most prominent opposition activist, Aleksei Navalny, has been...

The Return of Superman Episode 171

The Return of Superman Episode 171..

26-Feb, 09:12

The following The Return of Superman Episode 171 English Sub has been...

Thai law enforcement seeks defrocking of Buddhist monk

Thai law enforcement seeks defrocking of Buddhist monk..

10-Mar, 07:47

Law enforcement authorities have appealed to Thailand's ecclesiastical...

Ousted Arconic CEO resigns from board of Morgan Stanley

Ousted Arconic CEO resigns from board of Morgan Stanley..

21-Apr, 18:56

Klaus Kleinfeld, who was ousted as CEO of Arconic after sending a...