Oil slid after briefly rising above $50 a barrel in New York and sparking concern that prices surpassing that key level will only bring on more shale supply.
Futures declined 0.7% in New York after advancing for five straight sessions. OPEC and non-OPEC producers will convene in Abu Dhabi next week to discuss why some nations aren’t complying with production cuts. Baker Hughes Inc. data Friday showed the US oil rig count rose yet again and remains at the highest level since April 2015.
“It displays a healthy dose of skepticism that we couldn’t stay above $50,” Tamar Essner, an energy analyst at Nasdaq Inc. in New York, said by telephone. “It really speaks to this well-entrenched thesis in the market about prices being range-bound and the understanding that $50 and above facilitates too much production from shale.”
Oil climbed above its 200-day moving average last week for the first time since May as producers such as Saudi Arabia and Kuwait promised to reduce crude exports. Yet, US crude production is still above 9.4 million barrels a day, with doubts lingering over whether efforts by the Organization of Petroleum Exporting Countries and its allies including Russia will be successful in efforts to rebalance the market.
Representatives of some OPEC and non-OPEC nations will meet in the United Arab Emirates capital on 7-8 August to discuss why some of them aren’t fully implementing their commitment to cut output, according to an OPEC statement. Read More…