Oil Snaps 3-Day Rally
(Bloomberg) -- Oil fell to near $53 a barrel as America’s rig count rose for the first time this year, signaling further increases in the nation’s crude production, while Venezuela’s rival leaders jockeyed for control of the military.
Futures in New York dropped as much as 1.6 percent after climbing 2.1 percent over the previous three sessions. The number of rigs targeting oil rose by 10 to 862, data from oilfield-services provider Baker Hughes showed, as this year’s rising crude prices buoyed optimism. Venezuela abandoned its decision to sever diplomatic ties with the U.S., while President Nicolas Maduro and National Assembly leader Juan Guaido sought the backing of the country’s armed forces.
Oil has advanced 17 percent in 2019 as the Organization of Petroleum Exporting Countries and its allies began cutting production to ease concerns over a supply glut, although record U.S. production, rising stockpiles and the trade war are capping gains. A deepening crisis in Venezuela had a small upward impact on prices last week, and the prospect of U.S. sanctions on the nation is also threatening to make it more challenging for OPEC to manage markets.
“Rigs may continue to increase over the next few weeks” following the rebound in crude prices, said Satoru Yoshida, a commodity analyst at Rakuten Securities Inc. in Tokyo. While markets “largely shrugged off recent news regarding Venezuela, prices could be pushed up if the situation intensifies further,” he said.
West Texas Intermediate crude for March delivery fell 73 cents to $52.96 a barrel on the New York Mercantile Exchange as of 7:45 a.m. in London. The contract rose 56 cents to $53.69 on Friday.
Brent for March settlement dropped 74 cents to $60.90 a barrel on the London-based ICE Futures Europe exchange. The contract added 55 cents to settle at $61.64 on Friday. The global benchmark crude traded at a $7.93 premium to WTI.
Venezuelan President Maduro on Saturday sought to deflate tensions with the U.S. by backing off his earlier order to expel all diplomats. A small number of American diplomats in Venezuela will remain, Maduro said in an interview with CNN-Turk, even as he criticized U.S. Secretary of State Michael Pompeo, who urged other nations to “pick a side” between Maduro and his oppositions.
Meanwhile, hedge funds are becoming more bullish on oil’s prospects. They boosted wagers on increasing Brent crude prices by 17 percent in the week ended Jan. 22, the biggest increase since August, according to data released Friday by ICE Futures Europe. Short-selling bets have plunged by 36 percent this month, the biggest three-week drop in about a year.
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