Oil Halts Drop
(Bloomberg) -- Oil halted a decline as traders weighed output cuts from the OPEC producer group and its partners against expectations for rising U.S. crude inventories.
Futures in New York were little changed after a 1.3 percent drop on Monday. Russia curbed output by 47,000 barrels a day in January from its October baseline level, in line with the country’s pledge to OPEC, Energy Minister Alexander Novak said. Meanwhile, U.S. government data due Wednesday is forecast to show American crude inventories rose a third week.
Crude has rallied about 20 percent this year as production cuts by the Organization of Petroleum Exporting Countries and allies including Russia have taken effect. Rig data signaled U.S. shale drilling is slowing down despite record output from the nation. A battle for leadership of oil-rich Venezuela threatens further disruption to supplies.
“Both non-OPEC leader Russia and OPEC leader Saudi Arabia are complying with production cuts,” said Satoru Yoshida, a commodity analyst at Rakuten Securities Inc. in Tokyo. “If Venezuela’s output significantly falls, say by 1 million barrels a day for months, there would be a big impact.”
West Texas Intermediate crude for March delivery traded at $54.66 a barrel on the New York Mercantile Exchange, up 10 cents, at 8:19 a.m. in London. The contract declined 70 cents to $54.56 on Monday.
Brent for April settlement added 8 cents to $62.59 a barrel on the London-based ICE Futures Europe exchange. The contract fell 24 cents to $62.51 on Monday. The global benchmark crude was at a $7.59 premium to WTI for the same month.
Novak said Russia is following its obligations in line with an earlier announced pledge to gradually cut production by May. Still, Saudi Arabia’s Energy Minister Khalid Al-Falih said last month that Russia’s reductions were slower than he likes, though he was certain the country can ultimately contribute to balancing the market.
Output from OPEC’s 14 current members fell by 930,000 barrels a day last month to 31.02 million with Saudi Arabia cutting deeper than it pledged, according to a Bloomberg survey of officials, analysts and ship-tracking data.
In the U.S., crude inventories probably increased 1.5 million barrels last week, according to a Bloomberg survey of analysts before Energy Information Administration data. Extremely cold temperatures that hit the U.S. last week due to the polar vortex could lead to unusual changes in crude and fuel inventories, Rakuten’s Yoshida said.
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