Oil falls after failed North Korean missile test, U.S. rig count gains
Benchmark Brent crude futures were down 49 cents at $55.40 at 0310 GMT. On Thursday, before the break closed most major markets, they settled up 3 cents at $55.89 a barrel.business Updated: Apr 17, 2017 11:09 IST
Crude oil fell in quiet trading on Monday, after the three-day Easter break, on signs the United States is continuing to add output, undermining OPEC efforts to support prices, and as the market digested North Korea’s failed missile launch on Sunday.
Benchmark Brent crude futures were down 49 cents at $55.40 at 0310 GMT. On Thursday, before the break closed most major markets, they settled up 3 cents at $55.89 a barrel.
U.S. West Texas Intermediate crude futures were also down 47 cents at $52.71 a barrel. They rose 7 cents to $53.18 on Thursday.
Both benchmarks last week rose for a third consecutive week, with Brent adding 1.2% over the four days before the Good Friday holiday and WTI up 1.8%.
The market was subdued to start this week with major trading centre London closed for a holiday on Monday. Markets are braced for more geopolitical tensions over North Korea, after its attempted launch on Sunday of a ballistic missile failed as the projectile blew up almost immediately.
The United States is working with allies and China on responses to the failed test, U.S. President Donald Trump’s national security adviser said on Sunday.
Drillers in the United States last week added rigs for a 13th consecutive week, in a sign that output gains there will continue unabated.
Energy services firm Baker Hughes said on Thursday that drillers added 11 oil rigs in the week to April 13, bringing the total count up to 683. That is the highest in about two years.
Increasing U.S. output is proving a constant source of irritation to attempts by the Organization of the Petroleum Exporting Countries (OPEC) and other major oil producers to curb output and sustain a rally in prices in a market that has been oversupplied since mid-2014.
U.S. crude oil production has climbed to 9.24 million barrels per day, according to the latest Energy Information Administration data. That makes the country the world’s third-largest producer after Russia and Saudi Arabia.
While compliance has been strong among OPEC countries, production cuts have lagged among other producers including Russia. That may be about to change, according to BMI Research.
“Non-OPEC compliance will improve over the next two months with Russia driving the largest reductions in volume terms,” BMI said. “Kazakhstan is likely to continue to exceed its quota given strong output from the Kashagan field.”