Oil prices fall as market selloff continues

Andrew Cummings
August 22, 2017

U.S. West Texas Intermediate (WTI) crude futures were at $48.47 a barrel, down 4 cents, or 0.1 percent.

This was the fourth week-on-week decline in the country's oil rig count in eight weeks, and suggested a slowdown in United States drilling activity, contrasting with 23 successive weeks of additions since mid-January.

Drillers lost five rigs in the week to 18 August, the biggest fall since January, bringing the total count down to 763.

The average price of the Brent oil price benchmark jumped 30 per cent year on year to US$51.8 a barrel in the first half, after oil cartel Organisation of the Petroleum Exporting Countries (OPEC) was forced to cut output to counter USA shale oil producers' expansion enabled by cost saving drilling technology.

However, output from the USA was still on the rise, having broken through 9.5m barrels per day (bpd), the highest level since July 2015. The 584,000 barrel-a-day plant is the second-largest refinery in the U.S.

Oil prices declined on Monday as last week's rally spurred profit taking. Front month Nymex crude for September delivery fell 2.35% to around $47 per barrel, while front month ICE Brent crude for October delivery fell 2% to $51.66.

The global benchmark has been buoyed by recent signs that global supplies are tightening.

EconoTimes reports in its article Oil in Global Economy Series: US operating rigs decline for 4th time in 31 weeks that in May this year, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day for an extension.

He noted the growth rates are double those projected by the International Energy Agency which represents 29 major oil consuming nations, which he said will draw down inventories to support crude prices going higher.

Elsewhere on Nymex, gasoline futures for September declined 1.7 cents, or almost 1.1%, to $1.605 a gallon, while September heating oil slumped 0.9 cents, or 0.6%, to $1.610 a gallon.

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