Sign Up for FREE Daily Energy News
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • youtube2

Vista Projects
Copper Tip Energy Services
Vista Projects
Copper Tip Energy

Brent Slips to Lowest in a Month After U.S. Drilling Expands

These translations are done via Google Translate

February 5, 2018, by Alex Longley


Oil’s rally is unraveling on fears over a rise in U.S. production and as a deepening slump in equities undermined market support.

Benchmark Brent fell to its lowest level since Jan. 8 as Baker Hughes data showed American explorers last week raised the number of rigs drilling for crude to the highest in almost six months. A global slump in equities deepened on Monday, removing another pillar of support for the oil market.

Brent has broken $70 a barrel this year, extending a rally driven by the extension of an output deal until the end of 2018 by the Organization of Petroleum Exporting Countries and its allies. While crude’s strong start to the year was also helped by falling U.S. inventories, a strong rise in equities and a weaker dollar, analysts have been cautioning about the potential for a surge in U.S. shale production.

“The weaker opening was a combination of the risk-off sentiment that the stock market showed, but also the rig count which continues to rise,” says Ole Hansen, head of commodities strategy at Saxo Bank A/S. “It continues to confirm that U.S. producers are in good health and will increase production as prices go up.”

ROO.AI Oil and Gas Field Service Software

Brent for April settlement lost as much as 89 cents to $67.69 a barrel on the London-based ICE Futures Europe exchange. It traded 50 cents lower at $68.08 a barrel at 10:48 a.m. in London. The global benchmark crude traded at a premium of $3.31 to April West Texas Intermediate, the least since August.

WTI for March delivery dropped 19 cents to $65.26 a barrel on the New York Mercantile Exchange. Total volume traded was about 57 percent above the 100-day average.

U.S. drillers last week added six rigs to raise the number of machines drilling for crude to 765, the highest since Aug. 11, Baker Hughes data showed Friday. That may lead to a further increase in U.S. crude production, which breached 10 million barrels a day to the highest level in more than four decades in November.

Other oil-news:

The S&P 500 Energy Index slumped more than 6 percent last week after Exxon Mobil Corp. and Chevron Corp., the two largest U.S. oil explorers, both missed Wall Street’s profit and output forecasts, spurring a stock selloff among investors. European energy stocks fell on Monday. Short-sellers against WTI futures made an appearance for a third week, casting doubts over oil’s more than 50 percent rally since June. Short positions increased 6.3 percent to 39,127 contracts in the week ended Jan. 30, rising the most in eight weeks, according to CFTC data. Iran can swiftly boost oil production if OPEC decides to scrap limits on global output when the group meets next in June, Oil Minister Bijan Namdar Zanganeh said Sunday. Saudi Arabia kept pricing for its main crude grade to Asia unchanged for a second month as the world’s largest crude exporter responds to slower seasonal demand versus earlier expectation for a small decrease in a Bloomberg survey.

Share This:

More News Articles