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UPDATE 8-Oil settles a tad lower after sliding to 3-month lows

Published 14/03/2017, 08:46 am
© Reuters.  UPDATE 8-Oil settles a tad lower after sliding to 3-month lows
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* WTI, Brent crude prices in multi-session slump

* Goldman maintains Q2 WTI forecast of $57.50/bbl

* Russian oil major says U.S. shale growth imperils OPEC deal (New throughout, updates prices, market activity to settlement)

By Jessica Resnick-Ault

NEW YORK, March 13 (Reuters) - Oil prices settled a few cents lower on Monday, retracing much of an early retreat to three-month lows in a steep slide that began last week as investors wondered whether swelling U.S. crude supplies would hinder OPEC's efforts to restrict output and reduce a global glut.

Analysts said the slump may not have much further to go now that prices have fallen more than 8 percent since last Monday, the biggest week-on-week drop in four months.

Prices had risen on more than two months of reduced production from the Organization of the Petroleum Exporting Countries. Now, the market faces evidence that U.S. production remains high and global markets remain oversupplied.

"There is growing skepticism that the production cut has been enacted long enough to take care of the overhang," said Gene McGillian, director of market research at Tradition Energy. "The longs who piled in last year are turning on the market because there seems to be a realization that a six-month agreement isn't long enough to rebalance the market."

The steep price slide could slow as traders finish unwinding bullish long positions, McGillian said.

Brent crude futures LCOc1 settled down 2 cents at $51.35 a barrel. The session low was $50.85, the lowest since Nov. 30.

U.S. West Texas Intermediate crude (WTI) CLc1 settled down 9 cents at $48.40 a barrel.

Goldman Sachs (NYSE:GS) said in a note it remained "very confident" about commodity prices and maintained its price forecast of $57.50 for WTI in the second quarter. drillers added oil rigs for an eighth consecutive week, Baker Hughes data showed on Friday, and they have announced ambitious production growth plans. RIG/U and other major oil producers, including Russia, reached an agreement at the end of November to rein in production by almost 1.8 million barrels per day (bpd) in the first half of 2017. top oil major Rosneft warned that a recovery in U.S. oil output may deter OPEC and non-OPEC producers from extending production cuts beyond June and might lead to a new price war. OPEC states have been complying with supply curbs, led by Saudi Arabia, U.S. inventories have swelled to a new high. EIA/S

"It will be interesting to see how OPEC rhetoric will evolve with this price correction. Is price the only consideration when it comes to the decision of extending cuts?" BNP Paribas (PA:BNPP) global head of commodity strategy Harry Tchilinguirian told the Reuters Global Oil Forum.

He added that OPEC's task was more difficult as it aimed to cut inventory levels rather than simply target a specific price.

Money managers cut their net long positions in U.S. crude futures and options in the week to March 7.

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