By October 17, 2016 Read More →

Oil prices slide, OPEC action expectation limits losses

oil prices

A possible deal between OPEC members and some non-OPEC oil producing countries helped curb a fall in oil prices.  OPEC photo.

Oil prices fall due to oversupply concerns

By Ethan Lou

NEW YORK, Oct 17 (Reuters) – Oil prices settled down on Monday, weighed by oversupply concerns, with a spike in trade volume driving U.S prices below $50, but losses were limited amid a projected drop in American shale output.

Trades in U.S. crude futures contracts soared to 12,932 barrels during the minute of 9:35 a.m. EDT (1335 GMT), the highest since Oct. 13, as traders sold off contracts ahead of their Oct. 20 expiry date.

Prices rose slightly in the afternoon, as U.S. Energy Information Administration (EIA) showed shale oil production was expected to fall by 30,000 barrels per day (b/p) in November.

International benchmark Brent crude fell 43 cents, or 0.8 per cent, from the last settlement to close at $51.52 per barrel, after hitting a session low of $51.16 a barrel.

U.S. West Texas Intermediate (WTI) closed at $49.94 per barrel, down 41 cents, or 0.8 per cent, after hitting a session low of $49.47.

Analysts said traders had accumulated a high number of long positions, and were looking to sell ahead of their contracts’ expiry date as the U.S. Commodity Futures Trading Commission limits the number they can hold.

“There was a huge net speculative long position,” said Kyle Cooper, analyst at ION Energy in Houston. “You do have to get out of positions.”

Data from energy monitoring service Genscape showed a draw in crude stockpiles at the storage hub in Cushing, Oklahoma.

But traders said WTI was still under pressure from a report on Friday by oil services provider Baker Hughes, which showed U.S. drillers added four rigs in the week to Oct. 14.

Donald Morton, who runs an energy-trading desk at Herbert J. Sims & Co in Fairfield, Connecticut, said the projected decline in U.S. shale production bumped the market only slightly.

“It wasn’t a game changer for the day,” he said. “We rallied 25 cents a barrel, only to give it back for the most part.”

Analysts said that while the market was supported by expectations that members of the Organization of the Petroleum Exporting Countries (OPEC) would take action to support prices late next month, oversupply continued to weigh.

OPEC agreed in September to cut supply to between 32.5 million and 33.0 million b/d, and expects to finalize the details of the deal at its meeting in Vienna on Nov. 30.

OPEC pumped a record 33.6 million b/d of crude oil in September, with some members signalling they plan further increases.

Iran has said it is seeking to return its production to levels reached before it was hit by international sanctions in 2012.

(Additional reporting by Ahmad Ghaddar in LONDON and Henning Gloystein in SINGAPORE; Editing by Chris Reese and Lisa Shumaker)


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