Prices fall on fears of United States drillers counteracting OPEC cuts

Tammy Harvey
March 21, 2017

Oil prices extended losses on Monday to trade near a four-month low after increased drilling activity in the USA indicated a strong rise in production was coming.

Oil prices settled at their lowest level in almost a week, as another rise in active USA oil rigs renewed concerns over domestic production and some analysts anxious that a change to the G-20 policy statement may impact global trade. Saudi Arabia is ready to extend cuts if supplies stay above the five-year average, Energy Minister Khalid Al-Falih said in an interview on Bloomberg Television last week.

"We have already seen how worries of a border-adjustment tax moved the crude forward curve in the first few weeks following [President Donald] Trump's inauguration", said Troy Vincent, oil analyst at ClipperData.

The deal has lifted oil prices, but inventories in industrial nations are rising and higher returns have encouraged US companies to pump more.


April West Texas Intermediate crude CLJ7, -1.13% shed 56 cents, or 1.2%, to finish at $48.22 a barrel on the New York Mercantile Exchange, ahead of the contract's expiration at Tuesday's settlement.

Brent for May settlement declined as much as 75 cents, or 1.5 percent, to $51.01 a barrel on the London-based ICE Futures Europe exchange.

USA drillers added 14 oil rigs in the week to March 17, 2017 totalling to 631 rigs.

The revival of shale oil production - whose growth added to the oversupply that battered oil prices in mid-2014 - has restrained the rally this year and may worry OPEC leaders. This was not the highest level, but it was close: fund managers at that point had trimmed down their net position by a total of 16 million barrels from the previous week, and by a net 77 million barrels since the high point of 951 million from February 21 of this year.

Other reports by Ligue1talk

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