Oil dropped below $58 a barrel as investors weighed an increase in US oil drilling rigs against OPEC’s promise to extend output cuts through the end of next year.
Futures fell as much as 0.9 percent in New York after adding 1.7 percent Friday. OPEC and its allies including Russia agreed to keep the 1.8 million barrels a day of supply cuts in place and beefed up the extension with the inclusion of Nigeria and Libya. Executives from three of the biggest independent US drillers said while they won’t increase activity just because prices rise after OPEC agreed to prolong curbs, they will continue to grow.
Oil has advanced for three consecutive months through November amid optimism that cuts by Organization of Petroleum Exporting Countries and its partners are helping to balance the market. Drillers targeting crude in the US added two rigs to 749 last week, the highest level since late September, according to Baker Hughes Inc.
“Even though adding Nigeria and Libya is a positive sign, OPEC has basically played all its cards after deciding to extend production curbs through next year,” Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone. “As long as US shale suppliers exist, it will be hard to see further gains in oil prices from now on.”
West Texas Intermediate for January delivery was at $57.91 a barrel on the New York Mercantile Exchange at 1:14 p.m. in Seoul, down 45 cents. The contract gained 96 cents to settle at $58.36 Friday. Total volume traded was about 22 percent below the 100-day average.
Brent for February settlement dropped 39 cents to $63.34 a barrel on the London-based ICE Futures Europe exchange. Prices added $1.10, or 1.8 percent, to close at $63.73 on Friday. The global benchmark crude was at a premium of $5.42 to February WTI.
Pioneer Natural Resources Co., Parsley Energy Inc. and Newfield Exploration Co. said their emphasis will be on maintaining spending discipline and generating profits, rather than just boosting supply on higher oil prices. Pioneer plans to boost output from about 300,000 barrels of oil equivalent a day this quarter to more than 1 million by 2026.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.