Oil prices drop on increased US drilling activity

Tuesday, 12 December 2017 00:00 - - {{hitsCtrl.values.hits}}

SINGAPORE (Reuters): Oil prices fell on Monday, pulled down as the latest rise in the US rig count pointed to a further increase in American production, potentially undermining efforts led by OPEC to tighten markets.

US West Texas Intermediate (WTI) crude futures were at $57.05 a barrel at 0219 GMT, down 31 cents, or 0.5%, from their last settlement.

Brent crude futures, the international benchmark for oil prices, were down 34 cents, or 0.5%, at $63.06 a barrel.

“The largest concern for investors currently remains the rise in the US rig count, which could potentially jeopardise the OPEC and Russian agreement when they meet for a review in June, 2018,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.

The amount of rigs drilling for new oil production in the United States rose by two in the week to Dec.8, to 751, the highest level since September, General Electric Co’s Baker Hughes energy services firm said on Friday.

A higher rig count points to a further rise in US crude production, which has already increased by more than 15 percent since mid-2016 to 9.71 million barrels per day (bpd).

That’s the highest level since the early 1970s, and close to levels from top producers Russia and Saudi Arabia.

Rising US output threatens to undermine efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC producers, most importantly Russia, to support prices by withholding supplies.

OPEC and its allies started withholding supplies last January and currently plan to continue doing so throughout 2018.

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.