Oil fell as U.S. drilling continues to climb and Libyan crude ports prepare to reopen, undermining the potential for OPEC output curbs to rebalance the market, even if extended into the second half of the year.
Futures dropped as much as 1.9 percent in New York. Energy Minister Khalid Al-Falih said on March 16 that Saudi Arabia may extend its cuts if supplies stay above the five-year average. A day later, though, data showed the U.S. rig count growing for a ninth week and a Libya official said Sunday that the Es Sider and Ras Lanuf ports are preparing to restart oil exports.
U.S. oil this month dipped below $50 a barrel for the first time in 2017 as near-record U.S. stockpiles and rising output weighed on the production reductions by OPEC and its allies.
While the Organization of Petroleum Exporting Countries won’t decide until May whether to prolong the cuts, ministers including Russia’s Alexander Novak will meet this weekend in Kuwait to discuss the deal’s progress. Money managers cut net-longpositions on oil by a record.
"The reopening of the Libyan ports is the reason for today’s drop and the U.S. rig count doesn’t help," Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. "The drop in net-length is a signal from speculators that the market is vulnerable."
West Texas Intermediate for April delivery, which expires Tuesday, fell 67 cents, or 1.4 percent, to $48.11 a barrel at 9:59 a.m. on the New York Mercantile Exchange. The more-actively traded May contract dropped 56 cents to $48.75. Total volume traded was about 14 percent below the 100-day average.
Brent for May settlement declined 42 cents, or 0.8 percent, to $51.34 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.59 to May WTI.