Investors pull back bets on Opec

US inventories and production are on the rise, and shale drillers keep adding rigs

There are limits to investors’ love affair with Opec. After unprecedented optimism that the Organisation of Petroleum Exporting Countries will manage to ease a global supply glut, money managers reduced their bets on rising West Texas Intermediate prices for the first time in a month. While the group and other major exporters are pumping less crude, US inventories and production are on the rise, and shale drillers keep adding rigs. The US benchmark has traded mostly between $50 (Dh183.65) and $55 a barrel for the last two months.

“There’s starting to be fatigue about the range we’ve been trading in,” John Kilduff, a partner at Again Capital LLC, a New Yorkbased hedge fund that focuses on energy, said by telephone. “It won’t be summer until we break out to the upside.”

Opec achieved the best compliance rate in its history at the outset of its accord to cut production, a plan that’s being supported by strong demand, the International Energy Agency said in a February 10 report. In the past, Opec had often struggled to fully deliver promised cuts due to a reluctance to lose income and market share. Former Saudi Arabian Oil Minister Ali Al Nuaimi said on December 2 that, in the history of Opec deals, “the unfortunate part is we tend to cheat.” Meanwhile, US producers last week extended the biggest surge in oil drilling in more than four years as the shale plays of Texas and Oklahoma lure investment from ExxonMobil and Continental Resources Inc.