Crude oil prices fall on rising US rig count, Illinois refinery outage; OPEC, allies to meet in Vienna on output cut deal

Singapore: Oil prices fell on Monday as drilling activity in the United States picked up and a refinery fire in the US state of Illinois resulted in the shutdown of a large crude distillation unit. Concerns about faltering economic growth curbing fuel demand also weighed on oil markets, traders said. US West Texas Intermediate (WTI) crude futures were at $52.17 per barrel, down 55 cents, or 1 percent, from their last settlement. International Brent crude oil futures were down 27 cents, or 0.4 percent, at $61.83 a barrel. [caption id=“attachment_3478307” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] In the United States, energy firms last week increased the number of oil rigs operating for the second time in three weeks, a weekly report by Baker Hughes said on Friday. Companies added seven oil rigs in the week to 8 February, bringing the total count to 854, pointing to a further rise in US crude production, which already stands at a record 11.9 million bpd. WTI prices were also weighed down by the closure of a 120,000-barrels-per-day (bpd) crude distillation unit (CDU) at Phillips 66’s Wood River, Illinois, refinery following a fire on Sunday. Elsewhere, the head of Russian oil giant Rosneft, Igor Sechin, has written to the Russian President Vladimir Putin saying Moscow’s deal with the Organisation of the Petroleum Exporting Countries (OPEC) to withhold output is a strategic threat and plays into the hands of the United States. The so-called OPEC+ deal has been in place since 2017, aimed at reining in a global supply overhang. It has been extended several times and, under the latest deal, participants are cutting output by 1.2 million bpd until the end of June. OPEC and its allies will meet on 17 and 18 April in Vienna to review the pact. “I don’t think Russia will just … pull out of the OPEC+ agreement … but I wouldn’t be surprised at all if the cuts by certain non-members of the cartel are wound down over the course of the year,” said Matt Stanley, a broker with Starfuels in Dubai. Analysts said economic concerns were also weighing on crude oil futures. Vandana Hari of Vanda Insights said in a note that crude prices were dragged down “as China returned from a week-long Lunar New Year holiday and regional stock markets plunged into the red amid resurgent concerns over the US-China trade dispute”. Trade talks between the Washington and Beijing resume this week with a delegation of U.S. officials traveling to China for the next round of negotiations. The United States has threatened to increase tariffs already imposed on goods from China on March 1 if the trade talks do not produce an agreement. Preventing crude prices from falling further have been US sanctions on Venezuela, targeting its state-owned oil firm Petroleos de Venezeula SA (PDVSA). “The issues in Venezuela continue to support prices. Reports are emerging that PDVSA is scrambling to secure new markets for its crude, after the US placed additional sanctions on the country,” ANZ bank said on Monday.