Oil retreated as an OPEC-led committee said production cuts would need to be prolonged to balance the market.
Futures extended last week’s 6.7% fall in New York last week. The OPEC committee concluded that a six-month renewal to the output-cut deal is needed, delegates with knowledge of the matter said. Money managers boosted wagers that US oil futures would rise in week to April 18, government data showed. Futures rose earlier and the dollar weakened against the euro as a snap poll by Ipsos showed centrist Emmanuel Macron would win the second round of voting in France.
Oil retreated below $50 a barrel amid concern that rising U.S. crude production would offset efforts by the Organization of Petroleum Exporting Countries to trim a global glut. OPEC will decide at a meeting on May 25 whether to extend its pledged cuts into the second half of the year. In France, Macron’s spot in the second election round avoids a contest between the anti-European Union Marine Le Pen and the Communist-backed Jean-Luc Melenchon, curbing threats to the euro zone and encouraging investors to embrace more risk.
Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said: “There’s a lot of managed money in the market.
“If OPEC and the Russians don’t come to an agreement to prolong the cuts on May 25, they are going to flee and this market will be down the toilet. Until the agreement is signed, this market will be vulnerable.”
West Texas Intermediate for June delivery fell 25 cents to $49.37 a barrel at 9:28 a.m. on the New York Mercantile Exchange. Total volume traded was about 7 percent below the 100-day average. Prices closed at $49.62 on Friday, the lowest since March 29.
Brent for June settlement declined 20 cents to $51.76 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.39 to WTI.
US drillers targeting crude added five rigs to oil fields last week, boosting the count to 688, according to data Friday from Baker Hughes Inc. Exxon Mobil Corp. won’t be allowed to bypass U.S. sanctions against Russia to resume drilling in a joint venture targeting billions of barrels of Russian crude.
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