LONDON, March 14 — Oil reversed earlier gains after Saudi Arabia told Opec it raised output back above 10 million barrels a day in February, reversing about a third of the cuts it made the previous month.
Futures fell 0.6 per cent in New York after losing 9.2 per cent the previous six sessions. The kingdom, which had curbed supplies more than it needed in January to lead the way in an accord to re-balance world markets, told Opec it boosted production by 263,300 barrels a day last month, a figure that jarred with the group’s own estimate that Saudi production fell further.
Oil last week broke below US$50 (RM222) a barrel for the first time since December as rising US supply counteracted reductions by members of the Organisation of Petroleum Exporting Countries and 11 other nations that started January 1. The Saudi production increase comes as Energy Minister Khalid Al-Falih last week said the kingdom won’t indefinitely “bear the burden of free riders.” Russia, Iraq and the United Arab Emirates are yet to deliver all the curbs they promised.
West Texas Intermediate for April delivery was at US$48.13 a barrel on the New York Mercantile Exchange, down 27 cents, at 12 pm in London. Total volume traded was about 18 per cent below the 100-day average. The contract fell 9 cents to US$48.40 today, the lowest close since November 29.
Brent for May settlement was 23 cents lower at US$51.12 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of US$2.47 to May WTI.
At 10.011 million barrels a day, Saudi output is still below the ceiling of 10.058 million a day imposed by the agreement, according to the Opec report. Production data that the group derives from external sources, such as news agencies, showed Saudi output falling by 68,100 barrels a day to 9.797 million a day. The group as a whole got closer to full implementation of the cutbacks, with output falling in February by 139,500 barrels a day to 31.958 million a day.
US crude stockpiles probably increased by 3 million barrels for a 10th week of gains, according to a Bloomberg survey before data from the Energy Information Administration on Wednesday. Extending Opec’s cuts will accelerate the re-balancing of the market and help prices to return to “acceptable” levels, Kuwait’s Oil Minister Issam Almarzooq said, according to the official news agency Kuna. Opec producer Iraq will seek to boost output to 5 million barrels a day by the end of the year, Iraq Oil Report said, citing an interview with Oil Minister Jabbar Al-Luaibi. — Bloomberg