Oil falls 1 percent as
bullish bets fade with U.S. output rise
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[March 20, 2017]
By Karolin Schaps
(Reuters) - Oil prices fell more than 1 percent on Monday as investors
made record cuts to bets on rising prices after strong drilling data
from the United States fed concerns about the effectiveness of OPEC-led
production cuts to curb a supply glut.
Benchmark Brent crude futures were down 60 cents at $51.16 a barrel at
0934 GMT. U.S. West Texas Intermediate (WTI) crude futures were trading
71 cents lower at $48.07 a barrel.
"Speculative investors have thrown in the towel it seems. We've got
record selling in the week ending March 14 and the bleeding has not
stopped yet," said Carsten Fritsch, senior commodities analyst at
Commerzbank in Frankfurt.
"The continued increase in U.S. oil rigs adds to the bearish sentiment."
U.S. drillers added 14 oil rigs in the week to March 17, bringing the
total count up to 631, the most since September 2015, energy services
firm Baker Hughes Inc said on Friday. This extends a recovery that is
expected to boost shale production by the most in six-months in April.
Growing U.S. production is playing into concerns that a global
production cut deal by the Organization of the Petroleum Exporting
Countries and non-OPEC members is having less of an impact.
The prospect of higher output from Libya, which is exempt from the
output cut deal, is adding further bearish sentiment.
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A pump jack operates at a well site leased by Devon Energy
Production Company near Guthrie, Oklahoma September 15, 2015.
Libya's National Oil Corporation (NOC) said it was confident of regaining
control of two key oil ports, Es Sider and Ras Lanuf, which have a combined
capacity to export 600,000 bpd.
Reacting to the oil glut, financial oil traders cut their net long U.S. crude
futures and options positions in the week to March 14, the third consecutive
reduction, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
The reduction in net long positions was the largest on record, according to CFTC
data compiled by Reuters.
"Hedge selling from producers and long-liquidation from funds is a bearish
cocktail," said Ole Hansen, Saxo Bank's head of commodity strategy.
(Additional reporting by Henning Gloystein in Singapore; Editing by Edmund
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