Oil held near $68 a barrel as increasing drilling in the U.S. countered price gains driven by OPEC’s plans to continue tightening crude inventories.
Futures in New York dropped as much as 0.8 percent after data showed American drillers added five working oil rigs last week, stoking fears over surging U.S. output. The May oil contract gained 1.5 percent last week before expiring Friday as OPEC producers said supply curbs should continue in order to revive investments in oil and gas production.
Crude rallied this month to levels not seen since 2014 as geopolitical tensions ramp up in the energy-rich Middle East. While the Organization of Petroleum Countries and its allies wiped out 97 percent of the targeted surplus that has weighed on prices for three years, the cuts should continue, Saudi Arabia said during last week’s meeting of oil producers in Jeddah. Meanwhile, President Donald Trump on Friday slammed OPEC for artificially boosting prices.
“The fundamental dynamics of the oil market are highly affected by the OPEC output-cut agreement, and continuously increasing U.S. crude oil production,” said Michael Poulsen, an analyst at Global Risk Management Ltd.
West Texas Intermediate crude for June delivery traded at $68.01 a barrel on the New York Mercantile Exchange, down 37 cents, at 10:20 a.m. in London. The May contract added 0.1 percent to $68.38 on Friday. Total volume traded was about 15 percent above the 100-day average.
Brent crude for June delivery traded at $73.69 a barrel on the London-based ICE Futures Europe exchange, down 37 cents. Prices climbed 2 percent last week to settle at $74.06. The global benchmark crude traded at a $5.68 premium to June WTI.
Yuan-denominated futures for September delivery added 0.8 percent to 436.3 yuan a barrel on the Shanghai International Energy Exchange, after climbing 2.3 percent last week.
There’s still room for oil prices to rise and cooperation between producers should continue at least until their scheduled expiry at the end of the year, and possibly into 2019, according to Saudi Arabia, which is said to want oil prices near $80 a barrel. The United Arab Emirates Oil Minister Suhail Al Mazrouei rejected Trump’s accusation by saying the group is fulfilling its “role to correct the market.”
In the U.S., explorers have added 23 rigs so far this month, bringing the total working rigs to 820 last week, Baker Hughes data showed. The nation’s crude production has more than doubled from the lows of a decade ago, topping 10 million barrels a day each week since early February.
An attack on an oil pipeline supplying Libya’s biggest export terminal has reduced the North African country’s production by at least 80,000 barrels a day and will take several days to repair, the National Oil Corp. said Sunday. Money mangers have increased their bullish WTI crude bets by 24,758 net-long positions to 442,408, according to the U.S. Commodity Futures Trading Commission.