Oil declined in New York as OPECâ€™s supply cuts are tempered by a revival of shale drilling in the US. Futures slid 1.7 percent in New York, the biggest drop in more than three weeks. Saudi Arabia told OPEC it cut oil production by the most in eight years, while Kuwaiti Oil Minister Essam Al-Marzooq said the organization as a whole has delivered 92 percent of the output curbs it pledged.
Meanwhile, US oil drillers increased the rig count to the highest since October 2015, and the Energy Information Administration sees US shale-oil output jumping next month to the highest level since May 2016.
Oil has fluctuated above $50 a barrel since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply from Jan. 1 to help ease a global glut. The market will shift into a deficit during the first half of the year, and US crude stockpiles will shrink amid a decline in imports as the curbs take effect, Goldman Sachs Group Inc. said last week. Higher crude prices have spurred drilling
in the US, the worldâ€™s biggest oil
consumer. â€œThis is where the market takes a pause,â€ Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone. â€œYou have to balance what OPEC can achieve in the next six months versus increases in production elsewhere that dilute the effects of those cuts.â€
West Texas Intermediate for March delivery fell 93 cents to settle at $52.93 a barrel on the New York Mercantile Exchange. Total volume traded was about 3 percent below the 100-day average.
Brent for April settlement dropped $1.11, or about 2 percent, to end the session at $55.59 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a premium of $2.16 to April WTI.
A monthly report from OPEC on Monday showed the group lowered production by about 890,000 barrels a day in January, citing so-called secondary-source numbers. Saudi Arabia reduced output by 717,600 barrels a day last month. Venezuelaâ€™s Oil Minister Nelson Martinez said the country will reach 100 percent of its reduction goal in February.
The 11 OPEC nations bound by the accord cut production by 1.12 million barrels a day to 29.93 million a day last month, according to a Feb. 10 report from the International Energy Agency. Non-OPEC producers who are part of the deal implemented 269,000 barrels of their pledged cuts of 558,000 barrels a day in January. Even if all those reductions are made, total supply from outside OPEC will increase by 400,000 barrels a day this year.
While the cartel implements its deal, exempt producers are ramping up output. Libyaâ€™s production rose for a fifth month to 690,000 barrels day in January, the highest level in more than two years, while Nigeriaâ€™s output expanded to 1.6 million barrels a day last month.
US crude production jumped to the highest since April 2016 in the week ended Feb. 3, according to EIA data. Output from major US shale plays is forecast to grow to 4.87 million barrels a day in March, with production in the Permian Basin rising to 2.25 million barrels a day. Nationwide crude stockpiles probably rose by 3.25 million barrels last week, according to the median forecast in a Bloomberg survey.
â€œOPEC did its job in that it was able to put a floor under the market. Compliance has exceeded most peopleâ€™s expectations,â€ Bruno Stanziale, director of commodity strategy at Eurasia Group, said by telephone. â€œHowever, they have to come to the realization that they are only going to be cutting production to bring prices to a level where shale producers will start to invigorate drilling and thatâ€™s what we are seeing.â€
Russia will decide in April or May whether to extend the output-cut deal with OPEC, Energy Minister Alexander Novak said, according to a report from state news service RIA Novosti. Cushing, Oklahoma crude stockpiles fell by 50,000 barrels last week, according to a forecast compiled by Bloomberg.
The US Oil Fund saw a $87.3 million inflow last week, the largest weekly inflow since November. Money managers reduced their
net-long position by 5.4 percent
in the week ended February 7, US Commodity Futures Trading Commission data show.