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Corrected: Oil prices dip on further rise in U.S. drilling, demand slowdown

Reuters 

(Corrects OPEC and non-OPEC output cut to 1.8 million barrels from 1.2 million bpd in fifth paragraph, fixes syntax in Falih quotes in third and fourth paragraphs)

By Henning Gloystein

SINGAPORE (Reuters) - prices dipped on Monday, weighed down by a continuing expansion in U.S. drilling that has helped to maintain high supplies despite an OPEC-led initiative to cut production to tighten the market.

Signs of faltering demand have also prompted weakening sentiment, dropping prices to levels comparable to when the output cuts were first announced late last year.

Brent crude futures were down 18 cents, or 0.4 percent, at $47.19 per barrel at 0659 GMT.

U.S. West Texas Intermediate (WTI) crude futures were down 20 cents, or 0.5 percent, at $44.54 per barrel.

Prices for both benchmarks are down by around 14 percent since late May, when producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended their pledge to cut production by 1.8 million barrels per day (bpd) by an extra nine months until the end of the first quarter of 2018.

Traders said the main factor driving prices lower was a steady rise in U.S. production undermining the OPEC-led effort.

"The U.S. rig count continued to rise, up by 6 last week," Goldman Sachs said late on Friday.

"That's 22 weeks in a row that rigs have been added, a record run," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

U.S. producers have added 431 rigs since a trough on May 27, 2016, Goldman said. If the rig count holds at current levels, the bank added, U.S. production would increase by 770,000 bpd between the fourth quarter of last year and the same quarter this year in the Permian, Eagle Ford, Bakken and Niobrara shale fields.

Supplies from OPEC and other countries participating in the output cuts, including top producer Russia, also remain high as some countries have not fully complied with their pledges.

There are also indicators that demand growth in Asia, the world's biggest oil-consuming region, is stalling.

Japan's customs-cleared crude imports fell 13.5 percent in May from the same month a year earlier, to 2.83 million bpd, the Ministry of Finance said on Monday.

India, which recently overtook Japan as Asia's second-biggest importer, took in 4.2 percent less crude in May than it did a year ago.

In China, which is challenging the United States as the world's biggest importer, demand growth has been slowing for some time, albeit from record levels, and analysts expect growth to slow further in coming months.

"Reducing the glut of will be challenging," ANZ bank said on Monday.

(Reporting by Henning Gloystein; Editing by Tom Hogue and Christian Schmollinger)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Corrected: Oil prices dip on further rise in U.S. drilling, demand slowdown

(Corrects OPEC and non-OPEC output cut to 1.8 million barrels from 1.2 million bpd in fifth paragraph, fixes syntax in Falih quotes in third and fourth paragraphs)

(Corrects OPEC and non-OPEC output cut to 1.8 million barrels from 1.2 million bpd in fifth paragraph, fixes syntax in Falih quotes in third and fourth paragraphs)

By Henning Gloystein

SINGAPORE (Reuters) - prices dipped on Monday, weighed down by a continuing expansion in U.S. drilling that has helped to maintain high supplies despite an OPEC-led initiative to cut production to tighten the market.

Signs of faltering demand have also prompted weakening sentiment, dropping prices to levels comparable to when the output cuts were first announced late last year.

Brent crude futures were down 18 cents, or 0.4 percent, at $47.19 per barrel at 0659 GMT.

U.S. West Texas Intermediate (WTI) crude futures were down 20 cents, or 0.5 percent, at $44.54 per barrel.

Prices for both benchmarks are down by around 14 percent since late May, when producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended their pledge to cut production by 1.8 million barrels per day (bpd) by an extra nine months until the end of the first quarter of 2018.

Traders said the main factor driving prices lower was a steady rise in U.S. production undermining the OPEC-led effort.

"The U.S. rig count continued to rise, up by 6 last week," Goldman Sachs said late on Friday.

"That's 22 weeks in a row that rigs have been added, a record run," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

U.S. producers have added 431 rigs since a trough on May 27, 2016, Goldman said. If the rig count holds at current levels, the bank added, U.S. production would increase by 770,000 bpd between the fourth quarter of last year and the same quarter this year in the Permian, Eagle Ford, Bakken and Niobrara shale fields.

Supplies from OPEC and other countries participating in the output cuts, including top producer Russia, also remain high as some countries have not fully complied with their pledges.

There are also indicators that demand growth in Asia, the world's biggest oil-consuming region, is stalling.

Japan's customs-cleared crude imports fell 13.5 percent in May from the same month a year earlier, to 2.83 million bpd, the Ministry of Finance said on Monday.

India, which recently overtook Japan as Asia's second-biggest importer, took in 4.2 percent less crude in May than it did a year ago.

In China, which is challenging the United States as the world's biggest importer, demand growth has been slowing for some time, albeit from record levels, and analysts expect growth to slow further in coming months.

"Reducing the glut of will be challenging," ANZ bank said on Monday.

(Reporting by Henning Gloystein; Editing by Tom Hogue and Christian Schmollinger)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Business Standard
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Corrected: Oil prices dip on further rise in U.S. drilling, demand slowdown

(Corrects OPEC and non-OPEC output cut to 1.8 million barrels from 1.2 million bpd in fifth paragraph, fixes syntax in Falih quotes in third and fourth paragraphs)

By Henning Gloystein

SINGAPORE (Reuters) - prices dipped on Monday, weighed down by a continuing expansion in U.S. drilling that has helped to maintain high supplies despite an OPEC-led initiative to cut production to tighten the market.

Signs of faltering demand have also prompted weakening sentiment, dropping prices to levels comparable to when the output cuts were first announced late last year.

Brent crude futures were down 18 cents, or 0.4 percent, at $47.19 per barrel at 0659 GMT.

U.S. West Texas Intermediate (WTI) crude futures were down 20 cents, or 0.5 percent, at $44.54 per barrel.

Prices for both benchmarks are down by around 14 percent since late May, when producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended their pledge to cut production by 1.8 million barrels per day (bpd) by an extra nine months until the end of the first quarter of 2018.

Traders said the main factor driving prices lower was a steady rise in U.S. production undermining the OPEC-led effort.

"The U.S. rig count continued to rise, up by 6 last week," Goldman Sachs said late on Friday.

"That's 22 weeks in a row that rigs have been added, a record run," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

U.S. producers have added 431 rigs since a trough on May 27, 2016, Goldman said. If the rig count holds at current levels, the bank added, U.S. production would increase by 770,000 bpd between the fourth quarter of last year and the same quarter this year in the Permian, Eagle Ford, Bakken and Niobrara shale fields.

Supplies from OPEC and other countries participating in the output cuts, including top producer Russia, also remain high as some countries have not fully complied with their pledges.

There are also indicators that demand growth in Asia, the world's biggest oil-consuming region, is stalling.

Japan's customs-cleared crude imports fell 13.5 percent in May from the same month a year earlier, to 2.83 million bpd, the Ministry of Finance said on Monday.

India, which recently overtook Japan as Asia's second-biggest importer, took in 4.2 percent less crude in May than it did a year ago.

In China, which is challenging the United States as the world's biggest importer, demand growth has been slowing for some time, albeit from record levels, and analysts expect growth to slow further in coming months.

"Reducing the glut of will be challenging," ANZ bank said on Monday.

(Reporting by Henning Gloystein; Editing by Tom Hogue and Christian Schmollinger)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22