U.S. Oil Drilling Growth Shows First Signs of Cooling Off

Investors are also monitoring whether the Organization of the Petroleum Exporting Countries will extend ongoing production cuts into the second-half of 2017, a move which could offset rising US output. While all four of the biggest oil basins boosted activity this week, the handful of rigs added is the smallest amount of growth in almost two months.

June, which saw its first full day of trading as a front-month contract Friday posted a weekly loss of 7.4%.

Brent for June settlement declined US$1.03, or 1.9 per cent, to US$51.96 a barrel on the London-based ICE Futures Europe exchange.

US West Texas Intermediate (WTI) crude oil futures added 23 US cents, or 0.5 per cent, by 0037 GMT, but were still below the US$50 mark pierced on Friday at US$49.85 a barrel.

Data from Baker Hughes Friday afternoon showed that USA rigs drilling for oil rose (http://www.marketwatch.com/story/baker-hughes-data-show-us-oil-rig-count-edged-higher-this-week-2017-04-21) by 5 to 688 this week. AAA reported that prices at the pump have inched up every day over the course of three weeks, reaching an average of $2.42 per gallon nationally as of Friday.

"We find in fact that the USA inventory data since March has been surprisingly good: crude inventories have been tighter than seasonal through March and April, with main petroleum products drawing faster than seasonal since February", the analysts wrote.

Top OPEC producer Saudi Arabia is also a member of the JTC in its capacity as 2017 OPEC president.

Participants to the output cut are due to meet on May 25, with the primary issue being an effort to reduce global oil inventories, said Falih.

Novak said last week that "It still remains unclear whether the agreement should be extended".

A meeting of a technical committee of Opec and non-Opec countries in Vienna concluded that a six-month extension of production cuts would be necessary, two delegates with knowledge of the matter said.

"It all comes down to whether OPEC can deliver inventory cuts", Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis, said by telephone.

It said that if OPEC were to extend its output cut, that would boost prices, giving further encouragement to United States shale oil producers to pump more.

"If we settle under $50 a barrel today, it could be a risk-off type of thing" and the selling continues, said Tariq Zahir, who oversees $8 million as managing member of Tyche Capital Advisors LLC.

The measures taken earlier led to reduction in oil reserves by only 20 million barrels, while supply exceeds demand by more than 250 million barrels, he told Trend Apr. 21.

For Russia specifically, a drop in oil prices could also prove to be politically costly, suggesting it is likely keen to see the cuts extended, according to Croft.

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