Oil down 2 percent, breaks five-week rally as oversupply fears resurface
Oil futures fell more than 2 percent on Friday, ending Brent crude’s longest multi-week rally in 16 months as oversupply concerns reappeared as producers have started hedging future drilling, APA reports quoting Reuters.
Brent futures LCOc1 settled down 2.4 percent, or $1.38 a barrel, to $55.62, snapping a five-week winning streak that was the longest since June 2016. For the week, Brent lost 3.3 percent.
U.S. West Texas Intermediate (WTI) crude CLc1 dropped $1.50 to $49.29, a 3 percent decline, putting losses on the week at 4.6 percent.
Russia clarified remarks made by President Vladimir Putin about the oil market earlier this week, saying he did not propose extending a global oil output cut deal but said he recognized it was a possibility.
“Yesterday we had Russia and the Saudis talking about extending cooperation, and today we saw a little bit of backtracking with respect to additional cuts in production.” said Houston-based consultant Andrew Lipow. “What the market gained yesterday is clearly being given back today.”
The prospect of extended oil production cuts by the Organization of the Petroleum Exporting Countries and other producers led by Russia had supported prices in recent sessions.
Saudi Arabia’s energy minister said on Thursday he was “flexible” about prolonging the production-curbing pact until the end of 2018.
However, concerns linger about growing U.S. crude exports, due to a hefty WTI discount to Brent prices, which makes U.S. oil more competitive.
U.S. crude exports’ rise to a record of nearly 2 million barrels per day last week and the growth in U.S. production to 9.56 million bpd has fanned some concerns about oversupply.
Producer hedging has picked up as oil hit $50 a barrel, according to Bank of America analysts, who said that if producers keep boosting hedging, “they can limit the sensitivity of production to spot prices and continue to increase output in 2018.”
BofA noted that about 115 million barrels have been hedged since late August after lower-than-usual volumes of hedging in the early part of the year.
Supply may be somewhat restricted in the coming week, however, as the impending arrival of Tropical Storm Nate had already shut in 70 percent of offshore U.S. oil and gas production, according to the U.S. Bureau of Safety and Environmental Enforcement.
Related news releases
- 18.03.20181 person dead in shooting at Southern California mall, authorities say
- 18.03.2018Florida officials knew about bridge crack
- 17.03.2018Trump, South Korea's Moon discuss engagement with North
- 16.03.2018US: At least 6 dead in Florida bridge collapse
- 16.03.2018At least four dead in pedestrian bridge collapse at university in Miami - UPDATED
- 16.03.2018Nike brand president resigns; company probes workplace complaints
- 16.03.2018Colombia resumes peace talks with ELN rebels
- 16.03.2018Facebook Lite to launch in developed countries, including US
- 16.03.2018Broadcom tops revenue, profit on demand from smartphone makers
- 16.03.2018Several reported dead after pedestrian bridge collapses in Miami
- 15.03.2018Mueller subpoenas Trump organization, demands Russia-related docs
- 15.03.2018Explosion hits chemical plant in Texas, building ablaze - UPDATED
- 15.03.2018Former Trump campaign manager Manafort files to dismiss charges
- 15.03.2018U.S. Ambassador Haley tells U.N. Russia responsible for chemical attack
- 15.03.2018Trump taps commentator Kudlow for top economic adviser
- 15.03.2018US students rally nationwide against gun violence
- 15.03.2018Russian UN Envoy: 'Unacceptable' for UK to accuse Moscow of nerve agent attack
- 15.03.2018At least six die in Bolivia prison uprising
- 14.03.2018Three arrested, charged in US mosque bombing
- 13.03.2018White House fires top Tillerson aide after comments on Boss' firing
- 13.03.2018US defense secretary backs Afghan overtures to Taliban
- 13.03.2018Trump: Tillerson and I "disagreed on things" like the Iran deal
- 13.03.2018Trump sacks Rex Tillerson as state secretary
- 13.03.2018White House expects North Korea summit to happen despite Pyongyang's silence
- 13.03.2018US: House Republicans find no Trump-Russia collusion
- 13.03.2018U.S. may lift travel ban on 'important partner' Chad, Tillerson says
- 13.03.2018U.N. blames Honduras security forces for killing electoral protesters
- 12.03.2018U.S. warns if Security Council doesn't act on Syria, it will
- 12.03.2018Tillerson says several steps needed for U.S. talks with North Korea
- 11.03.2018Trump says North Korea talks could fail or bring 'greatest deal'
- 10.03.2018US Secretary of State Tillerson Ill, Cancels Africa Tour Events
- 10.03.2018Trump to rally for endangered Republican in Pennsylvania
- 10.03.20183 hostages and gunman dead at California veterans' home
- 10.03.2018U.S. seeks 'concrete actions' from North Korea before talks
- 10.03.2018UN welcomes planned Trump-Kim meeting
- 08.03.2018Alabama student dies in accidental school shooting: officials
- 08.03.2018U.N. urges Syria to ensure truce for Ghouta aid convoy on Thursday
- 07.03.2018UN secretary-general: Gender inequality and discrimination against women harms us all
- 07.03.2018U.S. President's top economic adviser stepping down
- 07.03.2018State Dept sanctions DPRK for using agent VX to kill Kim Jong Un’s half-brother
- 07.10.2017US: 3 men charged for Daesh-inspired plot attack in NY
- 07.10.2017Fed must hike rates in face of hot U.S. labor market: Rosengren
- 10.10.2017Oil prices climb after OPEC signals possible deal extension
- 07.10.2017Trump to unveil new responses to Iranian 'bad behavior': White House
- 07.10.2017Pentagon says fourth U.S. soldier killed in Niger ambush
- 07.10.201722 dead in Central America from Tropical Storm Nate