New York: Oil fell as Opec members added supply and US producers increased drilling, threatening to compound a global surplus.
Futures fell by as much as 1.5 per cent. Output from Opec member Libya expanded to 560,000 barrels a day, according to the National Oil Corp., up from 540,000 last week. Iran repeated plans to boost output to 4 million barrels a day. Rigs targeting crude rose for a seventh week to the highest since February, Baker Hughes Inc. said on its website. That followed the first gain in US stockpiles in six weeks.
Oil has fluctuated near $50 a barrel amid speculation over the ability of the Organisation of Petroleum Exporting Countries to implement an agreement to reduce supply. An Opec committee will meet later this month to try and resolve differences over how much individual members should pump. The details of how supply will be reduced need to be finalised by the group’s next meeting in Vienna on November 30.
“There’s a growing recognition that Opec will have a hard time getting their act together,” said Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida.
West Texas Intermediate for November delivery slipped 71 cents to $49.64 a barrel at 9:45am on the New York Mercantile Exchange. Total volume traded was 15 per cent below the 100-day average.
Brent for December fell 55 cents to $51.40 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $1.31 premium to December WTI.
For a story on oil speculators boosting bullish bets on WTI, click here.
US producers added four rigs to 432 last week, Baker Hughes said Friday. Explorers have now added more than 100 rigs since a steady expansion began in June. The nation’s crude inventories rose to 474 million barrels through Oct. 7, according to data from the Energy Information Administration. That’s the highest for that time of year since the EIA began publishing weekly data in 1982.
“The US rig count continues to grow,” said Hamza Khan, an analyst at ING Bank NV in Amsterdam. “The continual increase in the number of rigs does suggest that the upside in crude prices should be capped, with the threat of US oil output returning.”