Oil retreated from the highest close in five months amid signs a global glut will be prolonged as Middle East producers boost supplies.
Futures fell more than 1.5 percent in New York and London. Saudi Arabian Oil Co. will complete an expansion of its Shaybah oilfield by the end of May, allowing the world’s largest exporter to maintain total capacity at 12 million barrels a day, according to two people with knowledge of the plan. Iran has increased output by 1 million barrels a day since sanctions were lifted in January, Shana reported, citing Oil Minister Bijan Namdar Zanganeh.
Oil has rebounded after falling to the lowest in more than 12 years amid signs a global surplus will ease as U.S. production declines. The International Energy Agency reiterated on Thursday it expects output outside of the Organization of Petroleum Exporting Countries to decline by about 700,000 barrels a day this year, which would be the biggest drop in a quarter century.
“We’re still in oversupply,” Wayne Gordon, executive director for commodities at UBS AG Wealth Management, said in a Bloomberg television interview. “We don’t think that the production cuts that we’re seeing in the U.S. and non-OPEC countries are large enough yet to structurally support the oil price higher. For the next couple of months, we’re going to the downside again.”
West Texas Intermediate for June delivery lost as much as 1.8 percent to $42.95 a barrel on the New York Mercantile Exchange and was at $43.08 at 1:23 p.m. Singapore time. The contract gained 55 cents to $43.73 on Friday, the highest close since Nov. 10, capping a weekly gain of 8.4 percent. Total volume traded was about 14 percent below the 100-day average.
Saudi Expansion
Brent for June settlement slid as much as 70 cents, or 1.6 percent, to $44.41 a barrel on the London-based ICE Futures Europe exchange. Prices advanced 4.7 percent last week for a third weekly advance. The global benchmark crude was at a premium of $1.45 to WTI.
Production capacity of the Shaybah oilfield will rise to 1 million barrels a day from 750,000 barrels, said the people, who asked not to be identified because the information isn’t public. The field, in the Empty Quarter desert near the border with the United Arab Emirates, produces extra light grade crude with API gravity of 42 degrees, they said.
Oil-market news:
Iran’s production is close to pre-sanction levels, oil ministry news website Shana reported, citing Zanganeh. Kuwait oil output returned to 3 million barrels a day after the end of a labor strike, Al-Anba newspaper reported, citing industry executives it didn’t name. Production is expected to rise to 3.1 million barrels a day this week. Speculators’ net-long position in WTI jumped to the highest since May of last year in the week ended April 19, according to data from the Commodity Futures Trading Commission.
Recommended for you
