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Oil stays below US$69 as rising US drilling counters Opec curbs
OIL held below US$69 a barrel as signs that 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 per cent after data showed American drillers added five working oil rigs last week, stoking fears over surging US output.
The May oil contract gained 1.5 per cent last week before expiring on 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 Exporting Countries and its allies wiped out 97 per cent 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.
On Friday, US President Donald Trump slammed Opec for artificially boosting prices.
"While Trump criticised 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, said by phone in Seoul.
"The US 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 US$68.20 a barrel on the New York Mercantile Exchange, down 20 cents, at 7.30 am in London.
The May contract added 0.1 per cent to US$68.38 on Friday. Total volume traded was about 2 per cent above the 100-day average.
Brent crude for June delivery traded at US$73.91 a barrel on the London-based ICE Futures Europe exchange, down 15 cents. Prices climbed 2 per cent last week to settle at US$74.06. The global benchmark crude traded at a US$5.71 premium to June WTI.
Yuan-denominated futures for September delivery added 0.7 per cent to 439.7 yuan a barrel on the Shanghai International Energy Exchange, after climbing 2.3 per cent last week.
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, said Saudi Arabia, which wants to see oil prices near US$80 a barrel.
In the US, 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. BLOOMBERG