Oil drops as producers say they need more time to cut stockpiles
LONDON (Bloomberg) --A pledge by crude producers to consider extending their output-cut deal failed to excite oil bulls, with prices dropping as more time was seen needed to trim swollen global stockpiles.
Futures lost as much as percent 1.3% in New York, extending their third weekly drop this month as rising U.S. supplies offset the effect of output curbs by other producers. Five OPEC nations joined with non-member Oman to voice support for prolonging cuts past June, with Kuwait saying it should be for an additional six months. Russia said it needs more time before making a decision.
Oil last week slid to the lowest since November as U.S. stockpiles, output and drilling increased while OPEC and other nations continued with efforts to ease a global glut. A committee of ministers from Kuwait, Algeria and Venezuela and their counterparts from Russia and Oman, meeting over the weekend, asked OPEC to review the market and make a recommendation in April on rolling over output reductions.
“The relative lack of price reaction perhaps reflects some disappointment that nothing more concrete was forthcoming at the OPEC committee meeting,” said David Wech, an analyst at JBC Energy GmbH in Vienna. “It also shows the market’s increasing skepticism that either a rollover of the cuts can be agreed, or that it would have a lasting and significant impact on balances.”
WTI for May delivery dropped as much as $0.63 to $47.34/bbl on the NYME and was at $47.66 in London. Total volume traded was about 30% below the 100-day average. Prices rose $0.27 to close at $47.97 on Friday, paring the weekly loss to 1.7%.
Brent for May settlement was down $0.19 at $50.61/bbl on the London Europe exchange, and traded at a $2.95 premium to WTI. The global benchmark contract gained $0.24, or 0.5%, to $50.80 on Friday.
Russia needs more time to assess the market, inventories and production in the U.S. and other non-OPEC countries, Energy Minister Alexander Novak said in an interview. The nation has cut its output by 185,000 bpd compared with a target of 300,000, Novak said Saturday.
