Oil held below $69 a barrel as signs American shale explorers are ramping up drilling activity sent jitters through a market that hoped OPEC’s commitment to further drain a global oversupply would prop up prices.
Futures in New York dropped as much as 0.4 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 in 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.
“While Trump criticized OPEC for inflating prices, the market learned after the meeting in Jeddah that the group is willing to extend the output cuts, which will in the long term support prices,” Lim Jaekyun, a commodities analyst at KB Securities Co., said by phone in Seoul. “The U.S. is expected to continue boosting production, but it looks like that’s the only downside risk to oil at the moment.”
West Texas Intermediate crude for June delivery traded at $68.38 a barrel on the New York Mercantile Exchange, down 2 cents, at 1:25 p.m. in Tokyo. The May contract added 0.1 percent to $68.38 on Friday. Total volume traded was about 6.2 percent above the 100-day average.
Brent crude for June delivery traded at $74.10 a barrel on the London-based ICE Futures Europe exchange, up 4 cents. Prices climbed 2 percent last week to settle at $74.06. The global benchmark crude traded at a $5.72 premium to June WTI.
Yuan-denominated futures for September delivery added 0.7 percent to 439.7 yuan a barrel on the Shanghai International Energy Exchange, after climbing 2.3 percent last week.
See also: U.S. Oil Rush Spurs ‘Triangle’ Trade as Output, Exports Soar
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, Saudi Arabia, which wants to see oil prices near $80 a barrel, said. 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.
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