3 Min Read
NEW YORK (Reuters) - Oil slipped 1 percent on Monday as rising crude output on Libya and the United States countered OPEC-led production cuts aimed at clearing a supply glut.
Signs of slower-than-expected growth in manufacturing in China and a weaker figure for U.S. manufacturing sentiment also weighed on expectations for oil demand and the market.
Global benchmark Brent crude LCOc1 for July settled down 53 cents to $51.52 a barrel, while U.S. crude for June CLc1 dropped 49 cents, or 1 percent, to $48.84 a barrel. Volume was light, with about 336,000 U.S. front-month contracts changing hands, less than the daily average of 520,000 contracts. U.S. oil prices have declined in nine of the last 13 sessions.
"The market continues to hunt for a bottom," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.
U.S. crude has lost nearly 9 percent since April 11, weighed down by the market's impatience with the slow pace of inventory drawdown around the world even after major oil producers agreed late last year to cut production by 1.8 million barrels per day for the first half of 2017.
The Organization of the Petroleum Exporting Countries and participating non-OPEC countries meet on May 25 to discuss whether to extend that reduction. Given that inventories remain high and prices are half their mid-2014 level, OPEC members including top exporter Saudi Arabia support prolonging the curbs.
Libya's National Oil Company said production has risen above 760,000 bpd, highest since December 2014, with plans to keep boosting production. That OPEC member had been excluded from production cut estimates because armed conflict had sapped overall production.
Despite OPEC's efforts, the oil glut has been slow to shift.
"With four months of the cutting in effect we haven't seen a sizable reduction in global oil fuel inventories," Tradition's McGillian said. "It's not sizable enough to see some proof, and the market is having trouble holding most of its gains since 2016."
Iran's oil minister said on Saturday that OPEC and non-OPEC producers had given positive signals for an extension of output cuts, which Tehran would back.
U.S. drillers added nine oil rigs last week, bringing the count to the most since April 2015, energy services company Baker Hughes said on Friday. Crude output C-OUT-T-EIA in the United States is at its highest since August 2015.[RIG/U]
Additional reporting by Alex Lawler in London; Editing by Marguerita Choy and Andrew Hay