Oil edges lower as Saudi crude exports fall, U.S. cuts drill rigs
SINGAPORE – Oil prices edged lower on Monday as data showed Saudi Arabian exports fell to the lowest in five months despite record output, while a resurgence in U.S. drilling activity seen earlier this month seemed to fizzle out.
Both international and U.S. crude futures posted their third consecutive weekly losses last week on expectations of increased exports from Iran following a deal to ease sanctions against the OPEC producer.
Brent September crude was 15 cents lower at $56.95 a barrel by 0547 GMT. The benchmark had fallen nearly 3 percent last week and more than 10 percent for the month.
U.S. crude futures, also known as West Texas Intermediate (WTI), were down 22 cents at $50.67 on Monday, after falling more than 3 percent last week and more than 14 percent in July. The August contract expires on Tuesday.
Saudi Arabia’s crude oil exports fell in May to their lowest since December, with official data showing daily shipments stood at 6.935 million barrels a day (bpd) compared with 7.737 million bpd in April.
The decline came despite record high output of over 10 million bpd as the Kingdom – traditionally the world’s biggest exporter of crude – transforms into one of the largest oil refining centres.
In the United States, drillers cut seven oil rigs last week, according to a closely watched report by Baker Hughes Inc.
“At current prices, shale is supremely challenged and demand could pose an upside surprise,” Barclays said in a note to clients.
Analysts at Goldman Sachs said that should WTI get back to a level seen last month around $60 a barrel, “U.S. producers will ramp up activity given improved returns with costs down nearly 30 percent and producers increasingly comfortable (with the current economics).”
Schlumberger NV said it is betting on an uptick in demand in coming quarters for oilfield services in North America, a market that has been battered by the steep drop in oil prices.
Money managers cut their net long U.S. crude futures and options positions in the week to July 14, the U.S. Commodity Futures Trading Commission said on Friday.
Russian Energy Minister Alexander Novak said he will meet OPEC Secretary-General Abdullah al-Badri in Moscow on July 30 to discuss oil markets and the Iran situation.
Britain’s North Sea Buzzard oilfield began ramping up on Friday after an outage on Wednesday. The outage was supportive to Brent as oil from the field contributes to the calculation of the futures price. – Reuters