Oil traded near $52 a barrel as Saudi Arabia’s energy minister said it was unlikely OPEC would extend its supply cuts beyond June and the U.S. drilling expansion paused.
Futures were little changed in New York after losing 3 percent last week. Rigs targeting crude in the U.S. fell for the first time in 11 weeks, according to data from Baker Hughes Inc. OPEC probably won’t need to prolong output cuts beyond the agreed six-month term given the level of compliance with the reductions and the outlook for an increase in global consumption, Saudi Minister of Energy and Industry Khalid Al-Falih said.
“Based on my judgment today, I think it’s unlikely that we will need to continue” production curbs beyond June because the market will have rebalanced, Al-Falih told reporters in Abu Dhabi. Even so, OPEC will reassess the situation when it meets again in May and “all players have indicated their willingness to extend, if necessary,” he said.
U.S. oil has advanced since the deal between the Organization of Petroleum Exporting Countries and 11 other nations to trim supply, but was unable to sustain its rally above $55 a barrel amid concern that rising prices would spur more production. While Middle East producers have signaled they’re sticking to the pledged reductions, the U.S. recently raised this year’s output forecast.
West Texas Intermediate for February delivery was at $52.25 a barrel on the New York Mercantile Exchange, down 12 cents, at 8:52 a.m. local time. Total volume traded was about 52 percent below the 100-day average on Monday, which is a public holiday in the U.S. The contract lost 64 cents to $52.37 a barrel on Friday.
Brent for March settlement slipped 3 cents to $55.42 a barrel on the London-based ICE Futures Europe exchange, trading at a $2.39 premium to WTI for the same month. The global benchmark crude fell 56 cents, or 1 percent, to $55.45 on Friday and 2.9 percent over the week — the biggest decline since November.
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The U.S. rig count dropped by seven last week to 522, according to data published Friday. Drillers had previously added more than 200 rigs from a low in May, reaching the most machines in a year.