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UPDATE 8-Oil down 3 pct on concerns over rising Iraqi exports, U.S. output

Published 10/01/2017, 04:08 am
© Reuters.  UPDATE 8-Oil down 3 pct on concerns over rising Iraqi exports, U.S. output
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* U.S. rig count to rise to 850-875 by end 2017 - Barclays (LON:BARC)

* Iraqi Basra exports rise to record - officials

* Iraq gives full Feb. supply allocations to 3 refiners - sources

* Russia cuts supply by 100,000 bpd in early Jan - sources (Updates first paragraph, adds comments by Kuwait oil minister)

By Catherine Ngai

NEW YORK, Jan 9 (Reuters) - Oil prices tumbled by 3 percent on Monday on concern that record Iraqi crude exports and rising U.S. output would undermine OPEC's efforts to curb global oversupply.

U.S. crude futures CLc1 were trading at $52.36 a barrel, down $1.63 at 11:47 a.m. ET (1646 GMT). Brent futures LCOc1 were down $1.68 a barrel at $55.42.

In Iraq, OPEC's second-biggest producer, oil exports from the southern Basra ports reached a record high of 3.51 million barrels per day (bpd) in December, the oil ministry said. oil ministry underscored that the high levels from the south would not affect the country's decision to lower production in January to comply with the OPEC agreement. But some remained concerned over the feasibility of the cuts - which would have to come from the north.

"We have compliance with the Gulf countries, but the rest of the slate is looking a bit shaky," said Robert Yawger, director of the futures division at Mizuho Securities USA.

"With the big numbers coming out of the southern port of Basra for December ... it's implying that Iraq may be the first big crack in the wall of the OPEC agreement," he added.

Sources also told Reuters that Iraq's State Oil Marketing Company (SOMO) had given three buyers in Asia and Europe full supply allocations for February. lower optimism comes even though Russia, one of the world's largest crude producers, is apparently sticking with the agreement to cut. Russian energy market sources told Reuters the country's output had fallen by 100,000 bpd in the first week of the month. oil minister said on Monday he expected a "big commitment" by OPEC and non-OPEC producers to the deal to cut output, which was reached last year. He added that a committee will meet in Vienna on Jan. 21-22 to monitor compliance and agree on a "final monitoring mechanism." week, U.S. energy companies added oil rigs for a 10th week in a row, for a total of 529, Baker Hughes data showed. Barclays analysts said they expected the U.S. rig count to rise to 850-875 by year end. add that the recent uptick in hedging activity to protect future output for 2018 and beyond could put more pressure into the market.

"We see the optimism surrounding OPEC and non-OPEC production cuts being counterbalanced by fears of higher U.S. crude production as the higher rig count of last Friday still weighs," said Hans van Cleef, senior energy economist at ABN Amro.

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