Crude Oil Drops Near $48

Lucy Hill
March 21, 2017

Oil prices also fell on Monday after reports indicated that OPEC did not cut production as much as originally promised and that USA drilling continued to increase.

Global benchmark Brent crude fell as low as $51.01 a barrel this morning while West Texas Intermediate slipped to $47.84.

Light sweet crude oil (WTI) futures went up 0.03 dollar or 0.06 percent to close at USD 48.78 a barrel at the New York-based commodity exchange NYMEX.

US oil this month dropped below $50 a barrel for the first time this year as the nation's near- record crude stockpiles and increasing production weighed on the output reductions by the Organization of Petroleum Exporting Countries and its allies. The new lows come on the back of Friday's oil rig data from Baker Hughes, which said United States drillers added 14 rigs for a total of 631 last week, the most since September 2015. One OPEC source said shale production was expected to grow by about 300,000 bpd this year - a level the market could accommodate.

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Crude oil is weaker on Monday as United States oil production is showing no signs of slowing down.

Mr Sukrit Vijayakar of energy consultancy Trifecta said the rising drilling activity was "reinforcing the expectation of higher United States production offsetting (Opec's) supply cuts". Higher crude oil (FXN) (IXC) (USL) prices have a positive impact on oil producers' earnings such as Occidental Petroleum (OXY), Whiting Petroleum (WLL), Cobalt International Energy (CIE), and Continental Resources (CLR).

"The market is looking at lower demand, while supply is to see a marginal increase", said a futures trader from Kuala Lumpur. "Over the coming weeks we expect a sharp reduction in imports and increase in refining runs which should lead to impressive crude inventory draws", analysts at AB Bernstein said yesterday in a note to clients.

Other reports by TheDailyFarc

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