Oil extended declines following the biggest drop in more than a month after U.S. producers increased drilling as the market contends with an overhang of crude and fuel inventories.
Futures slid as much as 1.9 percent in New York after losing 3.7 percent Friday. Rigs targeting crude rose for a second week to 414, the most since February, according to data from Baker Hughes Inc. Members of the Organization of Petroleum Exporting Countries and other producers meeting in Algiers this month are considering a deal that will involve each country agreeing to voluntary output caps, shifting from a freeze on production.
Oil has fluctuated since rallying in August amid speculation OPEC and Russia would agree on measures to stabilize the market later this month. All solutions are possible, Algeria’s energy minister said Friday when asked if producers could raise output within the framework of a freeze. A deal to cap production was proposed in February but a meeting in April ended with no final accord.
“The market is still in surplus and there are high inventories, so we could see oil decline further from here, perhaps back to the low $40s,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “If OPEC can get their act together and agree on a deal, it could trigger a bit of short covering.”
West Texas Intermediate of October delivery lost as much as 85 cents to $45.03 a barrel on the New York Mercantile Exchange and was at $45.12 at 1:54 p.m. in Hong Kong. The contract dropped $1.74 to $45.88 a barrel on Friday, falling the most since Aug. 1. Total volume traded was about 16 percent above the 100-day average. Prices rose 3.2 percent last week.
Rig Count
Brent for November settlement dropped as much as 79 cents, or 1.7 percent, to $47.22 a barrel on the London-based ICE Futures Europe exchange. The contract lost $1.98 to $48.01 on Friday, the most since July 13. The global benchmark crude was at a premium of $1.58 to WTI for November.
For a story on hedge funds increasing their short positions in oil, click here.
The U.S. rig count gained by 7 last week, boosting the numbers of machines added since the start of July to 84, according to the Baker Hughes data. U.S. crude stockpiles are at 511 million barrels, the highest seasonal level in at least three decades, according to the Energy Information Administration.
Oil-market news:
Iraq said last week that it has already told OPEC officials a level at which it is prepared to cap output, without publicly revealing that figure. Forces loyal to a powerful Libyan military commander captured two key oil ports from rival fighters, deepening turmoil in the North African nation’s oil industry. Norway’s financial regulator said that banks exposed to oil-industry losses face a rise in impairments that will erode profits as the full effect of the slump in crude prices runs its course.
Recommended for you
