Oil set for monthly loss as OPEC cuts seen spurring US supply

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Oil is set for its first monthly decline since October as signs that US supply is expanding offset OPEC’s production curbs.
Futures lost 0.5 percent in New York and are down 2.3 percent in January. US oil production could increase to as much as 9.5 million barrels a day this year, near its 2015 peak, as rising prices spur drilling, according to the chairman of Pioneer Natural Resources Co. American crude inventories probably expanded by 3 million barrels last week, according to the median estimate in a Bloomberg survey before government data on Wednesday.
Oil advanced the last two months of 2016 as the Organization of Petroleum Exporting Countries agreed on Nov. 30 to reduce supply, with 11 other nations including Russia joining the deal less than two weeks later. While Middle East producers implement the cuts, US drillers targeting crude have increased the nation’s rig count to the highest level since November 2015.
“More shale oil offsets OPEC production cuts,” said Michael Poulsen, an analyst at Global Risk Management Ltd. West Texas Intermediate for March delivery fell 28 cents to $52.35 a barrel on the New York Mercantile Exchange as of 9:46 a.m. in London. Total volume traded was 80 percent above the 100-day average. The contract slid 54 cents, or 1 percent, to $52.63 a barrel on Monday.
Brent for March settlement, which expires Tuesday, lost 16 cents to $55.07 a barrel on the London-based ICE Futures Europe exchange. The contract fell 29 cents, or 0.5 percent, to $55.23 a barrel on Monday. The global benchmark crude traded at a premium of $2.72 to WTI. The more-active April contract slid 18 cents to $55.14.
US crude production has increased to 8.96 million barrels a day, the highest since April 2016, according to data from the Energy Information Administration. A gain in WTI to $55 a barrel would allow drillers in the Permian Basin to raise output and boost total production by about 1 million barrels a day, Pioneer Natural Resources Chairman Scott Sheffield said Monday in an interview.