Oil prices fall on relentless rise in US crude output

Oil prices fall on relentless rise in US crude output

While OPEC has complied with its 2017 production pledge, US flows that are gaining a bigger slice of the Asian market may cause some countries to increase supplies, which could drag down crude prices after a rally of more than 40% since June, ING says. In a monthly report issued Monday (http://www.marketwatch.com/story/us-shale-oil-output-forecast-to-climb-by-131000-barrels-a-day-in-april-eia-2018-03-12), the Energy Information Administration forecast a monthly rise of 131,000 barrels a day in April U.S. oil production.

As the rig count fell, "the market is starting to think that U.S. shale oil production may not steadily grow, which is supporting oil prices", Takayuki Nogami, chief economist at state-backed Japan Oil, Gas & Metals National, said by phone from Tokyo. A stronger dollar would likely dent oil prices.

The US economy added the biggest number of jobs in more than 1-1/2 years in February, with non-farm payrolls jumping by 313,000 jobs last month, the Labor Department said on Friday.

WTI settled down 68 cents to $61.36 per barrel while Brent fell 50 cents to $64.99 per barrel. The global benchmark traded at a $3.47 premium to May WTI.

According to Baker Hughes energy services firm, United States energy companies cut oil rigs for the first time in nearly two months, with drillers cutting back four rigs, to 796.

Still, fears over increasing USA production continue to weigh on producers and investors.

On Sunday, Iranian oil minister Bijan Zanganeh said OPEC could agree in June to begin easing current production curbs in 2019, the Wall Street Journal reported.

"The longer the deal goes on, it's going to start falling apart", ING commodities strategist Warren Patterson tells Bloomberg.

Crude's rebound since a year ago is encouraging American drillers to pump even as they make efforts to be disciplined on spending, Patterson said.

The pessimistic view was echoed in money managers' short-selling position. Contributions of 200 words or more will be considered for publication.

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