Oil falls as U.S. drillers boost rigs, Libya expands output
NEW YORK and ABU DHABI (Bloomberg) -- Oil declined as rigs targeting crude in the U.S. rose for a 15th week and production in Libya rebounded.
Futures fell as much as 1 percent in New York. The number of oil rigs operating in U.S. fields rose to the highest level in two years, according to Baker Hughes Inc. Libya’s output rose to more than 700,000 bpd as the OPEC member’s biggest oil field and another deposit in its western region resumed pumping after a halt. Money managers reduced wagers that oil futures would rise on both sides of the Atlantic in the week to April 25, reports show.
Oil has fallen the past two weeks amid concern growing U.S. output will offset efforts by the Organization of Petroleum Exporting Countries and its allies to trim a global glut. American production increased to the most since August 2015, and Saudi Arabia’s Energy Minister Khalid Al-Falih has acknowledged that OPEC-led curbs failed in the first quarter.
"There’s a sense that we’re still waiting to see any evidence of the market rebalancing," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone.
West Texas Intermediate for June delivery dropped 37 cents, or 0.8%, to $48.96/bbl at 9:01 a.m. on the New York Mercantile Exchange. Total volume traded was about 51% below the 100-day average.
Brent for July settlement fell 40 cents, or 0.8%, to $51.65/bbl on the London-based ICE Futures Europe exchange. Brent for June delivery expired Friday after climbing 0.4% to $51.73. The global benchmark crude traded at a $2.39 premium to July WTI. .
Trading was less active than usual because of the May 1 holiday celebrated in much of the world.
U.S. producers boosted the number of rigs drilling for oil by nine to 697 last week, a Baker Hughes report showed on April 27. Libya’s Sharara field is currently producing 216,400 bopd, while the El Feel, or Elephant, deposit is pumping 26,500 and is expected to boost output further, Jadalla Alaokali, a board member at the National Oil Corp., said Sunday.
“The return of Libyan supply makes the job of OPEC more challenging,” Giovanni Staunovo, a Zurich-based commodities analyst for UBS Group AG, said by email. “However, renewed supply disruption in Libya remains possible.”
Oil-market news. The market needs more time to start draining stockpiles that are on the verge of declining, Harold Hamm, chief executive officer of Oklahoma-based Continental Resources Inc., said at a conference in Dubai. South Korea’s crude imports fell 7.9% to 82.6 million bbl in April from a year earlier, according to the country’s Ministry of Trade, Industry and Energy.
