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Oil price fall, set to become first quarter’s worst-performing asset

Saturday, 1 April 2017

NEW YORK: Oil prices fell on Friday after a 3 day rally ran out of steam as a higher U.S. rig count signaled rising production from shale, contributing to the global supply glut.

Prices have been locked within a range during the first quarter as traders searched for signals that the Organization of the Petroleum Exporting Countries’ production cuts are effective or that U.S. production is continuing to offset efforts to rebalance the market.

Brent crude futures have recorded the biggest losses across global asset classes this quarter. In March, the contracts posted the biggest monthly losses since July as growing U.S. crude inventories and drilling activity counterbalanced production cuts elsewhere in the world.

Brent futures settled down 13 cents at $52.83 a barrel. The contracts have lost around 7% since the previous quarter, the largest quarterly losses since late 2015. U.S. crude futures settled up slightly, rising 25 cents to $50.60 a barrel after slipping below $50. They ended the quarter at about 5.7% lower, also the worst quarterly loss since late 2015.

Oil prices had gained momentum this week on a growing sense that OPEC and nonmember Russia would extend their production cut, seeking to drive the market higher. The U.S. energy department on Friday released supply and demand figures for January, the latest month available, saying the country’s oil demand for that month was up 0.9% at 19.234 million barrels per day, while production rose 60,000 bpd to 8.835 million barrels.

Energy services firm Baker Hughes said U.S. oil rigs increased by 10 to 662 in the week, making the first quarter the strongest for oil rig additions since mid-2011. The indicator has shown huge gains, with the rig count doubling in a 10-month recovery and undermining efforts led by OPEC to rein in output.

OPEC and non-OPEC producers including Russia agreed late last year to cut output by almost 1.8 million barrels per day in the first half of 2017 to ease a global supply overhang and prop up prices. Nevertheless, analysts polled on a monthly basis by Reuters have slightly lowered their oil price expectations for this year.

Source by: Internet

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