Oil prices retreat as data point to continued gains in U.S. output
Mar 13 2018 by Johnny Bowman
"Oil prices moved lower. after (the) Energy Information Administration published a report that crude production from seven major US shale plays is expected to see a climb", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.
"The market continues to flip back and forth on the idea that increased global demand and a production cut is going to support prices. but US production, and North American production levels in general, is going to negate a lot of the impact of that", said Gene McGillian, director of market research at Tradition Energy. The resulting fallout could drag down crude prices after a rally of more than 40 percent since June, he said.
"Employment is the key driver of oil demand, as more people at work means more commutes and, in effect, rising road fuel use", said Norbert Ruecker, head of commodity research at Julius Baer Ltd.in Zurich.
That has undercut some of the enthusiasm for oil, as investors weigh increased USA supply against the likelihood that the Organization of the Petroleum Exporting Countries and non-OPEC producers will maintain supply cuts that have been in effect for more than a year.
Crude's rebound since a year ago is encouraging American drillers to pump even as they make efforts to be disciplined on spending, Patterson said.
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April West Texas Intermediate crude fell 68 cents, or 1.1%, to settle at $61.36 a barrel on the New York Mercantile Exchange. Total volume traded was about 34% below the 100-day average. The contract climbed 3 percent to $65.49 on Friday.
In oil markets, US energy companies last week cut oil rigs for the first time in nearly two months RIG-OL-USA-BHI, with drillers cutting back four rigs, to 796, Baker Hughes energy services firm said on Friday.
Broader markets were roiled by U.S. President Donald Trump's decision to go ahead with tariffs in imported steel and aluminum, sparking fears of a trade war. Iran wants OPEC to work to keep oil prices at about $60 a barrel as an increase toward $70 will encourage shale oil output, the country's Oil Minister Bijan Zanganeh said, the Wall Street Journal reported.
The pessimistic view was echoed in money managers' short-selling position.