Oil halted gains near $57 a barrel as U.S. drillers expanded the crude rig count to a three-month high, potentially countering efforts by OPEC and its allies to drain a global glut.
Futures slid 0.4 percent in New York after climbing 2.5 percent in the previous two sessions. Drillers boosted the rig count by two to 751 for a third weekly advance, according to Baker Hughes data on Friday. OPEC-led output curbs may end earlier than scheduled if the market re-balances by June, Kuwait’s Oil Minister Issam Almarzooq said Sunday.
Oil is heading for a second yearly gain as the Organization of Petroleum Exporting Countries and its allies including Russia extend supply cuts through to the end of 2018. Shale explorers have signaled they’re gearing up for a drilling surge next year as hedging rose for an eighth week to a record.
“We think the oil price will be stronger next year looking at demand and compliance by OPEC to output cuts,” said David Lennox, a commodity analyst at Fat Prophets in Sydney. “How strong will be dependent how much extra oil we see coming from the U.S., that’s really the wild card for the market.”
West Texas Intermediate for January delivery was at $57.15 a barrel on the New York Mercantile Exchange, down 21 cents, at 2:02 p.m. in Hong Kong. Total volume traded was about 20 percent below the 100-day average. Prices rose 67 cents to $57.36 on Friday, trimming the weekly loss to 1.7 percent.
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Brent for February settlement fell 27 cents, or 0.4 percent, to $63.13 a barrel on the London-based ICE Futures Europe exchange. Prices slid 0.5 percent last week. The global benchmark traded at a premium of $5.91 to February WTI.
Russia is keen to end output cuts as early as possible, Almarzooq told Bloomberg in Kuwait City. OPEC will study an exit strategy from the global accord at its next meeting in June, he told reporters later. Oil prices should remain near current levels in 2018, he said.
While oil product inventories are rising, the small buildup will be offset by a decline in crude stockpiles, United Arab Emirates Energy Minister Suhail Al Mazrouei said at a conference in Kuwait.