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Oil prices fall on latest rise in U.S. drilling

Published 17/10/2016, 11:35 am
© Reuters.  Oil prices fall on latest rise in U.S. drilling
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* Record OPEC output, economic slowdown also weigh on markets

* Bernstein Energy cuts oil price outlook for 2017, 2018

By Henning Gloystein

SINGAPORE, Oct 17 (Reuters) - Oil prices fell early on Monday, pulled down by a rising rig count in the United States, record OPEC-output, and slowing global economic growth which could erode fuel demand.

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $50.03 per barrel at 0030, down 32 cents from their last settlement.

Traders said that WTI was pulled down by another rise in U.S. oil drilling activity.

A closely watched report on Friday by oil services provider Baker Hughes showed U.S. drillers added four rigs in the week to Oct. 14. It was the 16th week in a row that oil drillers had gone without making cuts, indicating more production to come. RIG/U

International benchmark Brent crude oil futures LCOc1 were also down, shedding 20 cents from their last settlement to $51.75 per barrel.

Traders said Brent was being weighed by fresh production records from the Organization of the Petroleum Exporting Countries (OPEC), which pumped out a record 33.6 million barrels of crude oil per day in September PRODN-TOTAL .

"Record supply from OPEC year-to-date, weaker global GDP estimates, and still elevated inventories cause us to lower and flatten our oil price outlook," Bernstein Energy said in a note to clients on Monday.

"We reduce our Brent forecast to $60 per barrel in 2017 ($70 per barrel before) and $70 per barrel in 2018 ($80 per barrel before)," it added.

Despite Monday's falls, analysts said that traders were cautious about driving the market much further down, largely because of a plan by OPEC to cut output in an initiative to rein in a global production overhang, which currently sees around half a million barrels of crude pumped every day in excess of demand.

OPEC is scheduled to meet on November 30 to discuss a production cut. The producer cartel hopes non-OPEC members, particularly Russia, will join a potential cut.

"With (non-OPEC member) Russia expressing an interest to join the agreement, investors are reluctant to get too bearish," ANZ bank said on Monday.

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