Crude oil futures plunge to to Rs. 3165 per barrel

OPEC members are cutting production in an effort to drive up oil prices, but a robust US output has prevented any significant rally.

Brent crude, the global benchmark, has dropped by nearly 7pc this month to $51.79/barrel while USA marker West Texas Intermediate has fallen by almost 10pc to $48.73/barrel.

On Friday, oil settled at $48.78 a barrel on the New York Mercantile Exchange, up 29 cents for the week.

Riyadh led OPEC and other producers in December to reach their first deal since 2001 to curtail oil output and prop up weak oil prices which had strained many producers' budgets.

Non-Opec oil supply is now projected to grow by around 400,000bpd this year to average 57.7mbpd, Opec said in said in its monthly market report.

U.S. Oil Rig Count, data by YCharts.

USA oil output has risen to over 9.1 million bpd from below 8.5 million bpd in June a year ago.

Iran has vowed to increase volumes of crude oil exported to buyers in the European Union by 60 percent over the next two months. The flood of selling in oil futures will likely continue as the prospect of higher prices fades.

The revival of shale oil production - whose growth added to the oversupply that battered oil prices in mid-2014 - has restrained the rally this year and may worry OPEC leaders.

Reacting to the ongoing glut in markets, financial oil traders cut their net long U.S. crude futures and options positions in the week to March 14, the third consecutive reduction, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. According to the most recent data, for January, inventories of crude and refined products stood 278 million barrels above this level.

Opec will meet 25 May in Vienna, Austria, to decide whether to extend its 1.2m bpd production cut.

The refusal by Saudi and Russian energy ministers as well as the OPEC secretary-general to commit to an extension of the OPEC/non-OPEC cuts, a big question for the market as the producers' output curb agreements close in on the half-way mark, continues to cast a shadow over the prospects of a speedy draining of oil inventories and an accelerated rebalancing of the market.

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.

  • Eleanor Harrison