Oil slides from nine-week highs as market looks to OPEC
LONDON (Reuters) – Oil prices edged lower on Monday, sliding away from nine-week highs, as worries lingered over high production from OPEC and the United States.
Global benchmark Brent crude futures LCOc1 were down 60 cents, or 1.14 percent, at $51.82 a barrel at 1113 GMT. They traded as low as $51.56 a barrel earlier in the day.
U.S. crude futures CLc1 were down 55 cents, or 1.11 percent, at $49.03 per barrel, but up from the day’s low of $48.78 a barrel.
Both contracts stood more than $1 below the levels hit last week, which marked their highest since late May, when oil producers led by the Organization of the Petroleum Exporting Countries extended a deal to reduce output by 1.8 million barrels per day (bpd) until the end of next March.
Doubts have since swirled around the effectiveness of the cuts, as OPEC output hit a 2017 high in July and its exports hit a record.
“The market is looking for comment from Saudi Arabia signaling OPEC will meet its agreed target,” said Hans van Cleef, senior energy economist with ABN AMRO. “The possibility for (price) movement seems limited unless OPEC comes out with a statement.”
Officials from a joint OPEC and non-OPEC technical committee are meeting in Abu Dhabi on Monday and Tuesday to discuss ways to boost compliance with the deal.
The OPEC concerns were more than enough to outweigh a protests at Libya’s Sharara oilfield, which led to a brief shutdown starting late on Sunday. The country’s National Oil Corp. said production at the 270,000 bpd field was restarting on Monday.
High oil output in the United States was counteracting other bullish factors, including a Baker Hughes report on Friday that showed a cut of one drilling rig in the week to Aug. 4, bringing the total count down to 765. RIG-OL-USA-BHI
U.S. weekly oil production hit 9.43 million bpd in the week to July 28, the highest since August 2015 and up 12 percent from its most recent low in June last year. C-OUT-T-EIA
Still, some analysts said strong words from OPEC could help shore up prices.
“The negative price impact at the start of the week coming from OPEC and compliance focus will probably dissipate,” said SEB Markets chief commodities analyst Bjarne Schieldrop.
“Saudi Arabia will restate that they will export only 6.6 million bpd (six-year low) in August and inventories will continue to draw down.”