Oil prices fall amid US drilling activity
SINGAPORE Oil prices fell yesterday as rising US drilling activity outweighed talks that an Opec-led production cut initially due to end in mid-2017 may be extended.
Benchmark Brent crude futures eased 22 cents, or 0.4 per cent, from their last close to US$50.58 per barrel by 0527 GMT (1.27pm, Singapore time).
In the US, West Texas Intermediate (WTI) crude futures were down 32 cents, or 0.7 per cent, at US$47.65 a barrel.
Traders said that prices received some support from talks over the weekend between the Organisation of the Petroleum Exporting Countries (Opec) and other producers aimed at extending a production cut beyond the middle of the year in order to prop up the market.
"Opec and non-Opec decided to get ahead of the game this weekend, announcing they are reviewing whether the output curb deal should be extended," said Mr Jeffrey Halley of futures brokerage OANDA in Singapore, adding that this had given crude some support.
But any Opec-led cuts have been offset by rising drilling activity and oil production in the US, which traders said contributed to financial traders reducing their long positions in crude futures to the lowest level since early December.
"The US oil rig count continued its surge... Since its trough on May 27, 2016, producers have added 336 oil rigs (+106 per cent) in the US," Goldman Sachs said in a note.
Since mid-2016, US oil production has risen by 700,000 bpd, or 8.3 per cent, to 9.13 million bpd, government data shows.
The US bank said that should the rig count stay at current levels and the impact of previously closed rigs returning to production was considered, then US oil production would rise by 235,000 bpd between the fourth quarter of 2016 and the first half of 2017. - REUTERS