Under broader pressure from the so-called Brexit, crude oil prices moved lower early Monday on a hangover from higher USA exploration and production work. "Although OPEC's inability to balance the oil markets in the first half of 2017 has sparked speculations of the organization extending its six-month contract, the rise of US shale and lingering concerns of some members not fully following the compliance in cutting production could create headwinds".
Data last week from oilfield services company Baker Hughes showed an increase in the number of rigs deployed in the United States for the ninth week in a row.
The IEA said crude stocks in the world's richest nations rose in January for the first time since July by 48 million barrels to 3.03 billion barrels.
The initial news about OPEC's planned cuts caused the price of Brent crude oil to soar from less than $4 per barrel to more than $52.
The cartel spent two years prioritizing export volume over prices to corner the market and hit the booming American oil industry, but was forced to cut production as lower earnings led to a record budget deficit.
Brent crude was down 58 cents at $51.18 per barrel, while U.S. benchmark WTI slid 74 cents to $48. Oil production cut by 200,000 barrels per day is planned to be achieved by end of March, Novak said.
"If you make it through this next OPEC compliance meeting and we don't have further jawboning by the Saudis and Russian Federation, or more compliance, I think that you have room to grow on the short side, which is worrisome", Brent Belote, founder of Cayler Capital LLC, which manages $5 million in oil-related assets, said by telephone.
Despite OPEC's greater ability to sustain the recent production agreement, a somewhat similar sequence of events is likely to occur now because of shale oil's fast responsiveness to price changes.
Bargain-hunting buying and a continuing weakening of the US dollar since the US Federal Reserve signalled a relatively dovish approach on further interest rate hikes through 2017 after effecting the latest increase March 15 was helping crude futures, battered for almost two weeks, cautiously tick up early Tuesday in Asia. They have added 106 machines to fields this year.
Growing U.S. production is playing into concerns about the effectiveness of the deal between members of OPEC and other producers. A day later, though, data showed the USA rig count growing for a ninth week, and a Libya official said Sunday that the Es Sider and Ras Lanuf ports are preparing to restart oil exports.
The worst is not over yet for oil and gas (O&G) companies as shale oil producers ramp up production and oil prices make a slow recovery. USA shale companies are producing at a more vigorous pace than earlier in the year.
Analysts expect USA production to continue to increase.