Oil extends decline as US drilling accelerates amid Opec cuts

Oil extended its decline below $50 a barrel as US drillers continued to boost activity, countering OPEC’s efforts to drain a global glut.

Futures in New York headed for a sixth day of losses, dropping as much as 1.2 per cent after falling 9.1 per cent last week. Rigs targeting crude in the US rose to the most since September 2015, according to Baker Hughes Inc. In Libya, crude production dropped 11 per cent as clashes among rival armed groups led to the closure of some of the OPEC nation’s biggest oil export terminals.

Oil last week broke below the $50 a barrel level it had held above since the Organisation of Petroleum Exporting Countries and 11 other nations started trimming supply on January 1.

US crude stockpiles have climbed to a record and production surged to the highest in more than a year, while Saudi Arabia’s Oil Minister Khalid Al Falih said global supplies are falling slower than expected.

“Supply appears to be outpacing demand, putting the focus back on the glut,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. “Opec is unlikely to react until prices get down to about $40 a barrel.”

West Texas Intermediate for April delivery lost as much as 59 cents to $47.90 a barrel on the New York Mercantile Exchange and traded at $48.10 at 1.18pm in Hong Kong.

Total volume traded was about 57 per cent above the 100-day average. The contract dropped 79 cents to $48.49 on Friday, capping the biggest weekly decline since November.

Rig Count

Brent for May settlement fell as much as 52 cents, or 1 per cent, to $50.85 a barrel on the London-based ICE Futures Europe exchange. Prices slid 8.1 per cent last week. The benchmark traded at a $2.38 premium to May WTI.

US drillers boosted the rig count by 8 to 617 last week, according to data Friday from Baker Hughes. Companies have added 92 machines to fields this year. The nation’s crude output has climbed to 9.09 million barrels a day, according to data from the Energy Information Administration.