Business World

Brent crude erases gains since OPEC agreed to cuts

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NEW YORK — Brent crude oil prices fell on Tuesday to its lowest level in over five months, erasing all of the gains since the Organizati­on of the Petroleum Exporting Countries (OPEC) agreed to cut production at the end of November, after breaking through a key technical support level.

The market was already trading lower prior to the technical selloff on reports of rising output in the United States, Canada and Libya and declining compliance by members of OPEC with the deal to cut output during the first half of this year.

Brent futures fell $ 1.06, or 2.10%, to settle at $50.46 a barrel, the lowest close since Nov. 29 — the day before OPEC agreed to cut supply.

US West Texas Intermedia­te crude fell $1.18, or 2.40%, to $47.66 a barrel, its lowest close since March 21.

The sharp technical decline came after US futures fell below last week’s low of $48.20 a barrel, which was their lowest since late March.

In the five minutes after prices fell below that key technical level, over 50,000 US contracts traded, representi­ng about 10% of total trade at that time on Tuesday.

“The market was already down on concerns about rising Libyan and US production and a Reuters report showing lower compliance to the OPEC production cut agreement,” said Phil Flynn, senior energy analyst at Price Futures Group in Chicago.

Oil prices pared losses briefly in aftermarke­t trading after data from the American Petroleum Institute showed that US crude stocks fell 4.2 million barrels last week, with Cushing, Oklahoma, inventorie­s drawing by 215,000 barrels. The US government will release its inventory data on Wednesday at 10:30 a.m. (1430 GMT).

OPEC’s compliance with the output cuts fell to 90% in April from a revised 92% in March, according to a Reuters survey. Earlier, the survey showed compliance in March was 95%.

OPEC and other producers, including Russia, plan to meet on May 25 and are widely expected to keep output limits for the rest of the year.

OPEC oil output fell for a fourth straight month in April, a Reuters survey showed, dropping to 31.97 million barrels per day ( bpd) as Nigeria and Libya pumped less crude.

Libya’s National Oil Co., however, said on Monday that production had risen above 760,000 bpd to its highest since December 2014, and it plans to keep boosting production. —

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