Oil slides as traders await evidence OPEC cuts are working

Date:2017-05-31 14:29:50

LONDON (Bloomberg) -- Oil declined in New York as traders awaited further proof that production cuts by OPEC and its allies, which were extended at a meeting last week, are having an effect.

 

WTI futures were down 0.8% from Friday’s closing price following the Memorial Day holiday on Monday. OPEC and Russia’s deal to extend output limits through March was initially met with a sell-off as deeper cuts or a plan for the rest of 2018 weren’t proposed. Saudi Arabia’s Energy Minister Khalid Al-Falih said the strategy is working and stockpiles will drop faster in the third quarter.

 

U.S. inventories have fallen for seven straight weeks in a sign the production limits may be working, though stockpiles are still above the five-year average. Saudi Arabia plans to reduce exports to the world’s biggest consumer to speed up that decline.

 

“OPEC has done enough to establish a floor, but at this stage the best they can probably hope for is to see oil hold around these levels,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank in Copenhagen. “We are in a wait-and-see mode. Major fund buying will only be seen once data begins to support.”

 

WTI for July delivery slipped $0.41 to $49.39/bbl on the NYME in New York. There was no settlement Monday because of the U.S. Memorial Day holiday.

 

Brent for July settlement lost $0.73, or 1.4%, to $51.56/bbl on the London exchange. Prices on Monday rose $0.14 to $52.29. Brent traded at a premium of $2.14 to WTI.

 

Oil Market News

 

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