Oil prices slides lower on Monday, January 23 as concerns over the potential for a sizeable rise in U.S. crude production outweighed support from Saudi Arabia’s energy minister, Khalid al-Falih.
Al-Falih had expressed confidence that a major international deal to cut crude output has started to drain the market of excess supply.
March Brent crude LCOH7, -0.41% on London’s ICE Futures exchange lost 56 cents, or 1%, to $54.93 a barrel, MarketWatch reports.
On the New York Mercantile Exchange, March West Texas Intermediate crude CLH7, -0.86% fell by 76 cents, or 1.4%, to $52.46 a barrel.
Bottom line, the Organization of the Petroleum Exporting Countries “continues to be successful in keeping fundamental short sellers on the sidelines,” but that “doesn’t change the fact that the outlook for oil remains bearish,” said Tyler Richey, co-editor for The 7:00’s Report.
Oil prices had gained traction over the weekend after al-Falih said OPEC and non-OPEC nations who agreed to rein in output are showing “very good compliance.”
According to OPEC officials, OPEC and 11 non-OPEC producers have already cut 1.5 million barrels a day from the global oil market—over 80% of the amount pledged.
But “even though global oil ministers are saying that there is widespread compliance, we won’t know for another couple of weeks” with industry data due out next month to offer some proof of compliance with a production cut deal that went into effect at the start of the year, said Richey, in his latest daily report. Official OPEC January production data will be released in mid-February.
Data from industry group Baker Hughes BHI, -2.23% released Friday shows the number of working oil rigs in the U.S. climbed by 29 in the week ended Jan. 20 to a total of 551. Those figures point to a potential rise in oil production.
Back on Nymex, prices for petroleum products traded lower along with oil. February gasoline RBG7, +0.18% traded at $1.561 a gallon, down less than half a cent, or 0.3%, while February heating oil HOG7, -0.73% fell 1.4 cents, or 0.9%, to $1.632 a gallon.
