Seoul: Oil traded near $50 a barrel as investors tempered their disappointment over an agreement by Organization of the Petroleum Exporting Countries (Opec) and its allies to extend production cuts without deepening them.
Futures were little changed in New York following Friday’s 1.8% advance. After the market was unimpressed with the accord Thursday to prolong output curbs, Saudi Arabia’s energy minister Khalid Al-Falih said the strategy is working and global stockpiles will drop faster in the third quarter. US explorers added two rigs, Baker Hughes Inc. said Friday, the smallest increase this year and a sign that a surge in American production may be slowing.
“We will see oil production tightening from the third quarter and it’s highly likely that prices will rebound," Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone in Seoul. “What’s concerning is what happens after the nine-month agreement because there isn’t an exit plan, while US producers will probably boost output at least until the second half of this year."
Oil in New York clawed back from its tumble toward $45 in the run up to the meeting in Vienna as Saudi Arabia and Russia rallied support for the deal. Meanwhile, US inventories dropped seven weeks in a row, though they still remain above the five-year average and production rose to the highest since August 2015.
West Texas Intermediate for July delivery traded at $49.73 a barrel on the New York Mercantile Exchange, down 7 cents, at 11:36am in Seoul. Total volume traded was about 12% below the 100-day average. Prices rose 90 cents to close at $49.80 a barrel on Friday.
Brent for July settlement was at $52.12 a barrel on the London-based ICE Futures Europe exchange. The contract gained 69 cents, or 1.3%, to settle at $52.15 on Friday. The global benchmark crude traded at a premium of $2.39 to WTI.
Rigs targeting crude in the US increased for a 19th straight week to 722, the longest gaining streak since August 2011, Baker Hughes data showed on Friday. While the number of working rigs has more than doubled from a low of 316 in May 2016, it was the smallest increase this year. Drillers in the D-J/Niobrara Basin in Colorado led the growth last week, adding 4 for a total of 27 oil rigs in the region. Bloomberg