Oil slips on OPEC cut extension doubts, Russia output worries

Mon Apr 24, 2017 3:58pm EDT
 
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By Devika Krishna Kumar

NEW YORK (Reuters) - Oil prices slipped nearly 1 percent on Monday, extending last week's decline, on lack of confirmation that OPEC will extend output cuts until the end of 2017 and as Russia indicated it can lift output if the deal on curbs lapses.

Russian oil output could climb to its highest rate in 30 years if the Organization of the Petroleum Exporting Countries and non-OPEC producers do not extend a six-month supply reduction deal beyond June 30, according to comments by Russian officials and details of investment plans released by oil companies.

"We think an extension is highly likely, with a growing OPEC consensus in support of that policy, but the market seems to be attributing last week's decline to the lack of a firm agreement," Tim Evans, Citi Futures' energy futures specialist, said in a note.

"In our view, the drop had more to do with correcting the prior excess optimism and speculative excess, than with any shift in the underlying fundamental scenario, but those requiring a fundamental explanation ... will focus on OPEC or U.S. production growth instead."

Last week, prices plummeted about 7 percent partly on signs that rising U.S. shale production offset efforts by OPEC and other producers to cut output by almost 1.8 million barrels per day (bpd) in the first half of the year.

Brent crude futures LCOc1 ended the session 36 cents lower at $51.60 per barrel after hitting a session high of $52.57 a barrel.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 dropped 39 cents to settle at $49.23 a barrel, after reaching a high of $50.22 a barrel earlier in the day.

"From a technical perspective, the June WTI contract has now broken another key Fibonacci level, specifically the 61.8 percent retracement of the rally from March 22 to April 12," said David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington.   Continued...

 
A worker at an oil field owned by Bashneft, Bashkortostan, Russia, in this January 28, 2015 file photo.      REUTERS/Sergei Karpukhin/Files