Oil touches three-month
lows, as U.S. supply swells
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[March 13, 2017]
By Amanda Cooper
LONDON
(Reuters) - Oil hovered around three-month lows on Monday, as rising
U.S. inventories and drilling activity offset optimism over OPEC's
efforts to restrict crude output.
Brent crude was up 4 cents on the day, at $51.41 a barrel by 0953 GMT,
having hit a session trough of $50.85, its lowest since Nov. 30.
U.S. West Texas Intermediate crude (WTI) fell 5 cents to $48.44 a
barrel.
The price has fallen by more than 8 percent since last Monday, its
biggest week-on-week drop in four months, and analysts said the slide
may not have much further to run.
"The market is bearish because sentiment has turned. The risk is still
towards the downside, but we are nowhere near the precipice," PVM Oil
Associates Tamas Varga said.
Goldman Sachs said in a note it remained "very confident" about
commodity prices and maintained its price forecast of $57.50 a barrel
for WTI in the second quarter.
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U.S. drillers added oil rigs for an eighth consecutive week, Baker
Hughes said on Friday, lifting spending to benefit from an earlier
recovery in crude prices since the Organization of the Petroleum
Exporting Countries (OPEC) agreed to cut output. [RIG/U]
OPEC and other major oil producers including Russia reached an agreement
late last year to rein in production by almost 1.8 million barrels per
day (bpd) in the first half of 2017.
Although OPEC states have been complying with supply curbs, led by Saudi
Arabia, it has not been enough to overshadow a rise in U.S. inventories
to a new high. [EIA/S]
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![](../images/031317pics/busine37.jpg)
Fuel pump nozzles are pictured at a Helios petrol station in Almaty,
Kazakhstan, June 10, 2016. REUTERS/Shamil Zhumatov
![](http://archives.lincolndailynews.com/2017/Mar/13/images/ads/current/peasley%20lda%20080907.png)
"It will be interesting to see how OPEC rhetoric will evolve with this
price correction. Is price the only consideration when it comes to the
decision of extending cuts?" BNP Paribas global head of commodity
strategy Harry Tchilinguirian told the Reuters Global Oil Forum.
He added that OPEC's task was more difficult as it aimed to cut
inventory levels rather than simply target a specific price.
Money managers cut their net long positions in U.S. crude futures and
options in the week to March 7.
For the broader financial markets, the focus will be on the Federal
Reserve's policy meeting later this week at which it could likely raise
U.S. interest rates.
"The week ahead is packed with potentially market defining releases,"
Michael McCarthy, chief market strategist at Sydney's CMC Markets, said.
"However, the key to market performance this week is the response to the
U.S. lift in rates."
(Reporting by Jane Chung in Seoul; Additional reporting by Keith Wallis
in Singapore; Editing by Edmund Blair)
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