By Sebastine, With Agency report
Oil prices recovered some ground on Monday following last week’s big losses, driven by expectations that the Organisation of Petroleum Exporting Countries, OPEC will extend a pledge to cut output to cover all of 2017, although a relentless rise in U.S. drilling capped gains.
The United States, U.S. West Texas Intermediate (WTI) crude oil futures added 23 cents, or 0.5 percent, but were still below the $50 mark pierced last Friday at $49.85 a barrel, while Brent crude futures rose 27 cents, or 0.5 percent, to $52.23 per barrel.
Oil prices fell steeply last week following high crude supplies, despite a pledge by OPEC and some other producers to cut production by almost 1.8 million barrels per day (bpd) for six months from January 1 to support the market.
Also, geopolitical worries remained an issue for investors following the French presidential election on Sunday as candidates were seen with a chance of making the run-off vote on 7 May. Centrist candidate Emmanuel Macron maintained a narrow lead in opinion polls, though a terrorism incident in Paris on Thursday pushed national security to the top of the political agenda. “After Brexit everyone has to be concerned,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, speaking of the surprise vote last June that resulted in the United Kingdom move to leave the European Union. “People are not going to trade if they are nervous nowadays. There is a little nervousness, a lot of uncertainty, so let’s wait and see.”
Meanwhile, U.S. drillers added oil rigs for a 14th week in a row, to 688 rigs, extending an 11-month recovery that is expected to boost U.S. shale production in May by the biggest monthly increase in more than two years. U.S. crude production is at 9.25 million barrels per day (bpd) and up almost 10 percent since mid-2016 and approaching that of OPEC’s top exporter Saudi Arabia.
“WTI oil slipped back below the $50 per barrel level, amid concerns that the lack of inventory drawdown since the OPEC production cuts is a sign that the cuts are not enough to rebalance supply and demand and put a floor under prices,” said William O’Loughlin, investment analyst at Rivkin Securities. Both the Brent and WTI oil benchmarks are down more than 7.5 percent since the end of last year. Keen to halt a further decline in prices, a panel made up by OPEC and other allied producers has recommended an extension of output cuts by another six months from June, a source said. This, and an expected fall in Iranian production lent markets some support on Monday, traders said.
Iran’s crude oil exports are set to hit a 14-month low in May, suggesting the country is struggling to raise exports after clearing out stocks stored on tankers. Iranian oil exports, especially to its core markets in Asia, had soared since the ending of most sanctions against it in January 2016.