Oil prices plummet amidst increasing USA drilling activity and steady OPEC supply

Crude oil

OPEC next meets to decide output policy on May 25 in Vienna.

Elsewhere on Nymex, gasoline futures for April declined 0.8 cents, or 0.5%, to $1.585 a gallon, while April heating oil dipped 1.3 cents to $1.495 a gallon.

The price is still almost $7 below January's post-deal peak of $58.37.

Reacting to the oversupply, traders cut net long positions in oil, the biggest cut on record, according to the US Commodity Futures Trading Commission (CFTC) data compiled by Reuters. Estimates of the compliance rate vary, but OPEC says that the parties to the recent agreement implemented 94% of their pledged production cuts by February.

The price action would be more bearish on a move below the 38.2% of the move up from the June 2016 low at the $47.60.

A poll of market analysts showed on Friday that OPEC will have to extend its oil output curbs beyond June as a revival in crude production outside the group, specifically in the US, may scupper its efforts to erode an overhang of unused inventory. Two years ago, analysts assumed that oil prices below $60 would cause a huge decline in shale oil production.

Brent Crude Oil Spot Price, data by YCharts.

The May contract of West Texas Intermediate crude oil futures, the USA benchmark of oil prices, fell 1.6% to $48.54 per barrel.

Among producers outside the cartel, the biggest contributor in 2017 is expected to be the United States, which will add 340,000bpd.

USA central bank lifted a key short-term interest rate by a quarter-point to a range of 0.75-1pc. A more pessimistic and protectionist outlook for global trade (see further down for more) has countered the signs of higher inflation to drive investors back into government bonds, at least for the time being.

Because gold is not yield-producing and investors have to rely on price appreciation for returns, the metal has a strong inverse correlation to U.S. government bond yields which slumped on the news.

Spot gold traded about 0.3% higher this morning, just shy of $1,234/oz.

The group wants stocks in the industrialised world to fall to the average of the past five years. The first quarter of the year is a low-demand period. Optimism over President Trump's $500bn infrastructure plans drove the metal upward.

The bigger headwind to prices is also the re-emergence of shale output.

Additionally, continued workers' strikes at major copper mines have also helped price escalation.

"It's sort of a negative feedback loop, where money managers were selling because the price was falling, and the price was falling in part because money managers were selling", said Tim Evans, an analyst at Citi Futures Perspective in NY, in a telephone interview.

Related news:

Hot News

isis-killer-beheading-video-story-top James Gunn confirms third sequel to 'Guardians of the Galaxy'
Mar 21, 2017 - 01:52
Apart from being part of the Marvel movie, the James Gunn movie will have a game series and an upcoming Disneyland attraction. What we do know however is the character's planetary form being the hardest visual effect to work with.

isis-killer-beheading-video-story-top Lillard's 36 spoil Aldridge's return as Blazers top Spurs
Mar 21, 2017 - 01:08
Buford. "'All of us have been impressed with the professionalism and grace he has shown in dealing with this hard situation'". Spurs Head Coach Gregg Popovich also said Aldridge has been a "consummate pro" while dealing with his heart arrhythmia issue.

isis-killer-beheading-video-story-top G20 finance ministers fail to reach an agreement to uphold free trade
Mar 21, 2017 - 00:35
Its decisions don't have the same force as an global treaty but depend on individual countries' promises to follow through. So far, he is one of the only members of Trump's Cabinet who has sought to develop relationships with foreign leaders.

isis-killer-beheading-video-story-top Teenager mauled by crocodile after jumping in infested river for dare
Mar 20, 2017 - 01:38
Cairns Senior Operations Supervisor Rita Kelly said the crocodile was not seen before the incident. He was reported to be stable in hospital and would undergo surgery to save the arm.

isis-killer-beheading-video-story-top Louisiana sheriff's deputy killed during investigation
Mar 20, 2017 - 01:07
The suspect was also injured and transported to a local hospital for treatment. Sunday messages of support and prayers spread across the city and online.