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Oil subdued as rising US output undermines OPEC effort to cut supply

Published 05/06/2017, 10:51 am
Updated 05/06/2017, 11:00 am
© Reuters.  Oil subdued as rising US output undermines OPEC effort to cut supply
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By Henning Gloystein

SINGAPORE, June 5 (Reuters) - Oil markets were subdued on Monday, with Brent struggling to maintain $50 per barrel as efforts led by OPEC to tighten the market were undermined by persistently rising U.S. production.

Brent crude oil futures CLc1 briefly rose above $50 per barrel in early trading, but had dipped back to $49.94 by 0040 GMT.

U.S. West Texas Intermediate futures CLc1 were at $47.69 a barrel, weighed down by ongoing climbs in U.S. production.

While there are signs that an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to curb production by almost 1.8 million barrels per day (bpd) is starting to impact actual supplies, traders said ongoing increases in U.S. output were undermining those cuts.

Shipping data in Thomson Reuters Eikon shows that OPEC tanker supplies to customers around the world were at 24.3 million bpd in May, down from 24.8 million bpd in April and compared with an average of 25.1 million bpd in the first five months of the year.

OPEC shipped an average of 26.4 million bpd in the last three months of 2016.

The low prices come as traders were wary of high supplies despite the OPEC-led effort to cut output. crude production nL1N1IY0O5 has jumped by over 10 percent since mid-2016 to 9.34 million bpd.

"Investors continue to doubt the ability of OPEC to rebalance the oil market, with crude oil prices remaining under pressure amid further signs of rising U.S. oil production," ANZ bank said on Monday.

The rise in production has been driven by a record 20th straight rise in oil drilling for new production, with the rig count rising by 11 in the week to June 2, to 733, the most since April 2015. release of rig data also weighed on sentiment," ANZ said.

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