Oil in Bear Market Declines for Fifth Week as Supply Climbs
(Bloomberg) -- Oil fell for a fifth week after slipping into a bear market on concern that rising production from the U.S. to Libya will offset cuts from OPEC and its allies.
Futures regained some lost ground Friday but closed nearly 4 percent lower for the week. U.S. crude output is expanding as shale drillers keep adding rigs, Libya is pumping the most in four years and oil stored in tankers rose to a 2017 high earlier this month. A committee tasked with monitoring compliance to the OPEC-led deal gave only cursory attention to the possibility of deepening existing curbs, according to delegates familiar with the meeting this week.
"It’s becoming bearish mania. I think they’re overdoing it," said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago. "If we keep going down, we’re not going to be adding rigs in a few months, we’re not going to be adding production."
Oil in New York and London tumbled into a bear market this week on concerns that expanding global supply will counter reductions from the Organization of Petroleum Exporting Countries and partners including Russia. Shale drillers added oil rigs for a record 23rd straight week as a growing backlog of unfinished wells -- and the crude that will eventually flow from those projects -- threatens to add to the global glut.
West Texas Intermediate for August delivery settled at $43.01 a barrel, up 27 cents, on the New York Mercantile Exchange. Prices have fallen 21 percent from their peak in February; a bear market is defined as at least a 20 percent drop.
Brent for August settlement closed at $45.54 a barrel on the London-based ICE Futures Europe exchange, up 32 cents. The global benchmark crude traded at a premium of $2.53 to WTI.
U.S. oil production rose by 20,000 barrels a day last week to 9.35 million, the Energy Information Administration reported Wednesday. While crude stockpiles slid by 2.45 million barrels to 509.1 million, a steeper decline than forecast in a Bloomberg survey, inventories remain about 100 million barrels above the five-year average.
"It’s very difficult to see at what point in time the original objective of this OPEC/non-OPEC agreement can be reached," Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida, said by telephone. "It’s a finish line that is getting farther and farther away."
- A Saudi-led bloc has presented steep demands to end the Qatar crisis, including cutting back diplomatic ties with Iran, according to a Gulf official.
- Abu Dhabi oil buyers have gotten approval to co-load Qatar crude, lifting one of the shipping restrictions imposed earlier this month, according to people with knowledge of the matter.
- Shipping and energy operations in the Gulf of Mexico were getting back to normal after Tropical Storm Cindy weakened, with Houston and Galveston-Texas City ship pilots resuming operations.
--With assistance from Ben Sharples and Angelina Rascouet
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