Oil slumps to close out biggest 3-day loss in a year

Fri Mar 10, 2017 4:04pm EST
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By David Gaffen

NEW YORK (Reuters) - Oil skidded again on Friday, pushing prices to three-month lows as investors continued to flee bullish positions on worries that OPEC-led production cuts have not yet reduced a global glut of crude.

U.S. crude slumped nearly 9 percent since Tuesday's close, the biggest three-day decline since February of 2016. The bullish outlook that prevailed for most of the last few months has been undercut by persistently high inventory figures, and was instrumental in herding speculators to the exits in the latter half of this week.

U.S. crude CLc1 settled down 79 cents, or 1.6 percent, to $48.49 a barrel, while Brent crude LCOc1 ended down 82 cents, or 1.6 percent, to $51.37 a barrel.

Selling appeared to accelerate in the afternoon after U.S. crude fell through the 200-day moving average of $48.68 a barrel.

Prices began to slide earlier this week, after news of another big rise in U.S. crude inventories to record highs. On Friday, oil services firm Baker Hughes reported another weekly increase in the U.S. drilling rig count.

"We have not seen production cuts undertaken by the world's producers really alleviate the overhang in inventories," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.

On Thursday, U.S. crude tumbled below $50 a barrel for the first time since December. Major oil producers like Saudi Arabia and United Arab Emirates expressed worries that the resurgent U.S. shale industry would undo their efforts to restrict supply.

U.S. oil and gas drilling has picked up, with producers planning to expand production in North Dakota, Oklahoma and other shale regions, while output has jumped in the Permian, America's largest oilfield.   Continued...

A pump jack stands idle in Dewitt County, Texas January 13, 2016.     REUTERS/Anna Driver