Oil Steadies Below $49 as US Drilling Threatens Longer Glut

Daniel Acker/Bloomberg News

Oil steadied below $49 a barrel as U.S. drillers continued to boost activity, countering OPEC’s efforts to drain a global glut.


Futures were little changed in New York after falling 9.1% last week, the biggest weekly loss since November. Rigs targeting crude in the U.S. rose to the most since September 2015, according to Baker Hughes Inc. In Libya, crude production dropped 11% as clashes among rival armed groups led to the closure of some of the OPEC nation’s biggest oil-export terminals.


Last week, oil broke below the $50-a-barrel level it had held above since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply on Jan. 1. U.S. crude stockpiles have climbed to a record and production surged to the highest in more than a year, while Saudi Arabia’s Oil Minister Khalid Al-Falih said global supplies are falling slower than expected. Rising U.S. output is the “main threat” to the global output deal, according to Russia’s largest producer.


“Few would bet against a further selling spree,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. The market has been “vulnerable to a downward spiral” as speculators remain heavily invested despite “a lack of bullish catalysts.”


West Texas Intermediate for April delivery lost 19 cents to $48.30 a barrel on the New York Mercantile Exchange at 12:12 p.m. in London. Total volume traded was about 18% more than the 100-day average. The contract dropped 79 cents to $48.49 on March 10, capping the biggest weekly decline since November.


Brent for May settlement fell 11 cents to $51.26 a barrel on the London-based ICE Futures Europe exchange. Prices slid 8.1% last week. The benchmark traded at a $2.41 premium to May WTI.


U.S. drillers boosted the rig count by eight to 617 last week, according to data March 10 from Baker Hughes. Companies have added 92 machines to fields this year. The nation’s crude output has climbed to 9.09 million barrels a day, according to data from the Energy Information Administration.


Oil-market news:


• Libyan output has dropped by about 80,000 barrels a day to 620,000 barrels since fighting broke out among armed groups March 3, according to a person familiar with the matter, who asked not to be identified because they aren’t authorized to speak to the media.


• While OPEC’s deal with non-members to curb output “shows its sustainability” and would be useful for the global economy, there are risks the agreement won’t be extended because U.S. producers are reacting so rapidly to higher prices, Rosneft PJSC’s press service said by e-mail.


• John Wood Group agreed to acquire Amec Foster Wheeler in an all-share deal that values the U.K. engineering-service provider at about 2.23 billion pounds ($2.7 billion). The shares of both companies surged.