Oil dropped below $US50 a barrel as investors lost faith that an extension of OPEC-led supply cuts will overcome growing US production and ease a global glut.Front-month futures in New York fell 6.7 per cent this week, the biggest loss since early March. While a number of exporters have reached an initial deal to extend the curbs past June, according to Saudi Arabian Oil Minister Khalid Al-Falih, rising US output is raising concern that those cuts will be undermined. OPEC and its allies have failed after three months of cuts to meet their goal of reducing global supplies below the five-year historical average, Al-Falih said.
Share on Facebook SHARE Share on Twitter TWEET
Goldman Sachs said there’s no fundamental evidence to justify this week’s selloff in oil prices. Photo: Bloomberg Oil’s rally has faltered after three straight weekly gains on expectations the Organisation of Petroleum Exporting Countries and its allies will extend its supply reductions. Prices dropped 3.8 per cent on Wednesday after government data showed US production rose for a ninth straight week, even as stockpiles continued to decline from a record. US explorers added 5 oil rigs this week to cap the longest stretch of gains since 2011, Baker Hughes data show.”The drumbeat of bearish data continues to put pressure on the market,” Michael Cohen, head of energy commodities research at Barclays Plc in New York. “The bulls don’t have much of a leg to stand on now.”West Texas Intermediate for June delivery dropped $US1.09, or 2.2 per cent, to $US49.62 a barrel on the New York Mercantile Exchange. It’s the lowest close since March 29. Total volume traded was about 8 per cent above the 100-day average at 2.40pm Friday .Brent for June settlement declined $US1.03, or 1.9 per cent, to $US51.96 a barrel on the London-based ICE Futures Europe exchange. Prices fell 7 per cent this week. The global benchmark crude closed at a $US2.34 premium to WTI.
Goldman Sachs said there’s no fundamental evidence to justify this week’s selloff in oil prices. The bank finds the drop in US crude supplies encouraging and expects the declines to accelerate through the second quarter amid OPEC cuts and demand growth, analysts including Damien Courvalin and Jeffrey Currie said in a report. Meanwhile, a mid-week slide was driven by oil trading through its 50-day and 100-day moving averages, Goldman said.Gulf Cooperation Council countries agreed to push for an extension to the OPEC-led cuts in a meeting on Wednesday, Oman Oil Minister Mohammed Al Rumhy said in an interview in Abu Dhabi. The GCC comprises OPEC members Saudi Arabia, Kuwait, Qatar and the United Arab Emirates, as well as Oman and Bahrain. GCC states are participating in the current deal to cap …