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
- 18.01.2018U.S. signals open-ended presence in Syria
- 17.01.2018Venezuela helicopter pilot Oscar Pérez killed in raid
- 17.01.2018U.S.-led meeting urges North Korea pressure despite North-South detente
- 17.01.2018Internal solution to Syria would be better: UN chief
- 17.01.2018US withholds $65M aid to Palestine: State Dept
- 17.01.2018Trump administration to appeal 'Dreamer' immigrant ruling
- 16.01.2018At least seven killed in military helicopter crash in Colombia - Army
- 16.01.2018US president hails Qatar anti-terror role
- 15.01.2018Russia’s Lavrov slams US statements on Iran nuclear deal
- 14.01.201813 dead, 39 hurt in multi-vehicle crash in Brazil
- 14.01.2018False missile alert sparks Hawaii panic
- 14.01.2018Trump, Lighthizer discuss China, NAFTA trade talks: White House
- 13.01.2018General Motors reveals self-driving car without steering wheel - VİDEO
- 13.01.2018Florida monkeys to be evicted after study finds they carry lethal Herpes B virus
- 13.01.2018Death toll from California mudslides climbs to 18
- 13.01.2018Food riots in Venezuela leave four dead, 16 wounded
- 13.01.2018Trump should apologize for any vulgar language, says Haiti's ambassador to U.S.
- 13.01.2018U.S. sanctions head of Iran's judiciary, others, over human rights abuses
- 13.01.2018Reluctant Trump grants sanctions relief to Iran one last time
- 12.01.2018Trump uses vulgarity in describing Haiti, African nations
- 12.01.2018Zuckerberg announces new changes to Facebook
- 12.01.2018Trump says he has a "very good relationship" with Kim Jong Un
- 12.01.2018Key Fed official slams U.S. tax cuts for imperiling economy
- 12.01.2018US Treasury to impose new sanctions on Iran
- 11.01.2018Trump to attend Davos economic forum: White House
- 11.01.2018State Dep't: US to fight Iran's presence in Syria with aggressive sanctions
- 11.01.2018Trump says US could stay in Paris climate accord
- 11.01.2018Death toll rises to 17 in California mudslides
- 11.01.2018US: Pence to head delegation to South Korea Olympics
- 11.01.2018U.S. concerned by Iran crackdown, 'will not remain silent': White House
- 10.01.2018Trump says U.S. open to talks with North Korea: White House
- 10.01.2018Magnitude 7.6 earthquake strikes off Central America
- 10.01.2018Death toll reaches 13 killed in Southern California deluge - UPDATED - VİDEO - UPDATED
- 10.01.2018Trump signals he could endorse immigration deal
- 10.01.2018Jeff Bezos is the richest person in the world
- 09.01.2018At least 5 dead as rain, mud roil California in US
- 09.01.2018Fed's Kashkari: Keep interest rates low to boost wages, inflation
- 09.01.2018Pentagon Chief: Iranian people are ‘fed up with’ revolutionary regime
- 09.01.2018US ending temporary residence for 200,000 Salvadorans
- 08.01.2018Two injured in fire at New York's Trump Tower - UPDATED
- 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