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Oil slips from 16-month high as US boosts rigs after Opec pact
[HONG KONG] Oil retreated from the highest close in 16 months as US producers continued to boost drilling after Opec agreed to reduce output for the first time in eight years.
Futures slid as much as 1.2 per cent in New York after advancing 14 per cent the previous three sessions. Drillers added rigs for a fifth week to the most since January, according to data from Baker Hughes Inc on Friday.
Organization of Petroleum Exporting Countries' members will meet with producers from outside the group in Vienna on Saturday to discuss the supply curbs, according to people familiar with the situation.
Oil has climbed above US$51 a barrel after Opec agreed Wednesday to reduce the group's output by 1.2 million barrels a day by January, while Russia pledged a cut of as much as 300,000.
Attention will now shift to compliance. The deal can balance the market, but "we tend to cheat," former Saudi Arabia Oil Minister Ali Al Naimi said at an event in Washington, DC.
"Given the Opec production agreement is in place, I suspect any pullback in prices from here is going to be reasonably minor," said Ric Spooner, a chief market analyst at CMC Markets in Sydney.
"There is a concern that shale production may come back quickly around these price levels."
West Texas Intermediate for January delivery fell as much as 64 US cents to US$51.04 a barrel on the New York Mercantile Exchange, and traded at US$51.16 at 7.57am in London.
The contract gained 1.2 per cent to US$51.68 on Friday, the highest close since July 2015. Total volume traded was 19 per cent above the 100-day average. Prices rose 12 per cent last week.
Brent for February settlement lost as much as 69 US cents, or 1.3 per cent, to US $53.77 a barrel on the London-based ICE Futures Europe exchange. The contract increased 52 US cents to US$54.46 on Friday, the highest close since July 2015. The global benchmark traded at a US$1.83 premium to WTI for February.
US drillers increased the rig count by 3 to 477 last week, according to Baker Hughes. Companies have now added 161 rigs nationwide since an expansion started at the end of May.
Oil-market news: Iran's oil output was 3.8 million barrels a day in September, President Hassan Rouhani told parliament.
Indian oil demand growth may weaken as the government's cash crackdown slows the economy, according to Ivy Global Energy Pte, FGE and Centrum Broking Ltd.
Nigeria will maintain output at 1.9 million barrels a day, Emmanuel Ibe Kachikwu, the nation's minister of state for petroleum, said in New Delhi.