Futures lost 1 percent in New York, falling for a second day. While U.S. crude stockpiles are forecast to have extended declines for an eighth week, American drillers continue to add rigs to shale fields. The OPEC-led deal to reduce production has helped to “stabilize the situation on the world hydrocarbons market,” Russian President Vladimir Putin said at a meeting in Moscow with Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman.
Oil has regained some ground after slumping Thursday as the agreement by the Organization of Petroleum Exporting Countries and its partners to prolong supply curbs for nine months disappointed investors hoping for more. Saudi Arabia’s Energy Minister Khalid Al-Falih said the cuts are working and predicted global inventories will fall to the five-year average early next year.
“The market will now be watching OPEC for compliance and looking at the weekly U.S. numbers to see if inventories continue to fall,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “While U.S. production is trending higher, we would expect to see the price climb back into the low $50s.”
West Texas Intermediate for July delivery was at $49.19 a barrel on the New York Mercantile Exchange, down 47 cents, at 2:50 p.m. in Hong Kong. Total volume traded was about 3 percent below the 100-day average. The contract lost 14 cents to $49.66 on Tuesday. There was no settlement Monday because of the U.S. Memorial Day holiday.
Brent for July settlement, which expires Wednesday, dropped 43 cents, or 0.8 percent, to $51.41 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.22 to WTI. The more actively traded August contract slid 49 cents to $51.75.
U.S. crude stockpiles probably fell by 3 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Thursday. American drillers last week boosted the rig count by 2 to 722, the highest level since April 2015, according to data Friday from Baker Hughes Inc.
- Goldman Sachs equities team reduced this year’s Brent oil forecast to $55.39 a barrel from $56.76 and WTI estimate to $52.92 from $54.80.
- Saudi Arabian Oil Co., known as Saudi Aramco, may raise the Arab Light crude differential by 30 cents a barrel for July sales to Asian customers, according to a Bloomberg survey.