Oil declined below $53 a barrel as the US continued to ramp up drilling, stoking fears the nation’s surge in output this year will counter Opec-led efforts to cut a global supply surplus.
Futures fell as much as 1 percent in New York, paring last week’s 1.8 percent advance. US explorers added 11 rigs last week, capping the longest stretch of gains since 2011, according to Baker Hughes Inc. data. Prices fell even after Saudi Arabian Oil Co. chief executive officer Amin Nasser said the global oil market is moving closer to balance despite the US shale boom.
The recovery in US drilling activity is damping optimism that had sent prices above $53 a barrel after some members of the Organization of Petroleum Exporting Countries voiced support for prolonging production cuts with other nations beyond June. While US crude stockpiles declined from a record, Opec said in a report Wednesday that rivals in the American shale industry are growing stronger.
“US drillers are recovering output faster than the market predicted and it’s getting faster every day,” Will Yun, a commodities analyst Hyundai Futures Corp., said by phone in Seoul. This “makes it hard to predict how much it’s capable of expanding production.”
West Texas Intermediate for May delivery fell as much as 55 cents to $52.63 a barrel on the New York Mercantile Exchange, before trading at $52.82 a barrel at 4:08 p.m. in Seoul. Futures gained 94 cents last week to close at $53.18 a barrel. Total volume traded was about 13 percent below the 100-day average.
Brent for June settlement dropped as much as 58 cents, or 1 percent, to $55.31 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $2.31 premium to June WTI. No futures were traded in New York or London on Friday due to the Good Friday holiday.
The US drill rig count climbed to 683 last week, the highest since April 2015 and a 13th week of gains, Baker Hughes data showed on Friday. The number of working rigs has more than doubled from a 2016 low of 316 in May.
Explorers in the Lone Star State led the week’s growth, with eight more rigs put to work in the Permian Basin of west Texas and New Mexico while three started up in the Eagle Ford of south Texas.