Oil halted gains near $48 a barrel after U.S. rigs targeting crude rose a 17th week, countering a report that OPEC and other major producers reached an initial agreement to extend output cuts.
Futures were little changed in New York after adding 3.5 percent last week. The Organization of Petroleum Exporting Countries and other major producers have reached a preliminary agreement to extend limits on output, state-run Kuwait News Agency reported on Sunday, citing Oman’s Oil Minister Mohammed Al Rumhy. U.S. drillers added nine rigs targeting crude bringing the total to 712, the most since April 2015, Baker Hughes Inc. said Friday.
While OPEC ministers will meet May 25 to decide whether to go forward with an extension of their cuts that started Jan. 1, concerns remain about the pace of production growth. A recent increase in Libyan output, together with a surge in North American shale production and signs of recovery in Nigeria, may undercut OPEC’s strategy to re-balance the market and prop up prices.
West Texas Intermediate for June delivery was at $47.77 a barrel on the New York Mercantile Exchange, down 7 cents, at 8:52 a.m. in Tokyo. Total volume traded was about 53 percent below the 100-day average. The contract gained 1 cent to $47.84 on Friday.
Brent for July settlement fell 8 cents, or 0.2 percent, to $50.76 a barrel on the London-based ICE Futures Europe exchange. The contract increased 7 cents to $50.84 on Friday. The global benchmark crude traded at a premium of $2.65 to July WTI.