Worry Over Rising US Output Causes Crude to Drop 1.1 Percent

Andrew Cummings
March 13, 2018

Oil steadied near $62 a barrel in NY after signs of economic strength in the US sent prices higher by the most in seven months on Friday.

Crude's rebound since a year ago is encouraging US drillers to pump even amid efforts toward spending discipline, and as USA output continues to expand, more exports will sail to Asia, the traditional bastion of Middle East producers, Patterson says. After the US boosted rigs drilling for oil for six straight weeks, American explorers idled four rigs last week, easing fears over surging shale production.

U. S. stocks, though, were little changed on Monday, with the S&P 500 up 0.1 points, or 0.00 percent, to 2,786.67.

"Employment is the key driver of oil demand, as more people at work means more commutes and, in outcome, rising road fuel use", said Norbert Ruecker, head of commodity research at Julius Baer Ltd.in Zurich.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished lower on Monday on renewed concerns over rising U.S. production and tight OPEC supply. Still, America is pumping record amounts of crude and forecasts for even more output are keeping prices below the highs of January. Total volume traded was about 23 percent below the 100-day average.

At 0820 GMT, May WTI Crude Oil is trading $61.19, down $0.14 or -0.23% and June Brent Crude Oil is at $64.65, down $0.14 or -0.22%.

Benchmark 10-year notes last rose 2/32 in price to yield 2.8865 percent, from 2.894 percent on Friday.

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.

Signs of strength in the USA economy and data showing American explorers curtailed drilling activity is helping oil hold gains after its biggest jump in seven months.

Investors will then be anticipating OPEC's next move as concerns about US production will likely dominate the oil cartel's June meeting in Vienna.

Some of the market's fears were echoed in money managers' short-selling position.

Hedge funds and money managers pared their bullish wagers on US crude oil, with long positions falling last week for the first time in three weeks.

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