By Scott DiSavino
| NEW YORK
NEW YORK Oil on Monday declined by about 2 percent, the most since mid January, as a stronger dollar and signs of rising U.S. crude output pressured prices while an OPEC report showing high compliance with last year's production-cut deal underwhelmed investors.Brent futures were down $1.17, or 2.1 percent, at $55.53 a barrel by 12:34 p.m. EST (1734 GMT), while U.S. West Texas Intermediate crude fell 99 cents, or 1.8 percent, to $52.87 per barrel.Those were the biggest percentage declines for both contracts since Jan. 18."A firmer U.S. dollar prompted some risk off trade flow across a range of commodities, with the petroleum futures attracting their share of the selling," Tim Evans, Citi Futures' energy futures specialist, said in a note.Hopes of U.S. tax cuts to stoke corporate profits and investments lifted the dollar to a near three-week high against a basket of currencies, pressuring greenback-denominated oil.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, agreed late last year to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017 to support prices and lessen a glut.The group's first monthly data since the deal showed that top producer Saudi Arabia made a large cut in its crude output in January, helping boost compliance with the group's supply-reduction deal to a record high of 93 percent. Saudi Arabia told OPEC that it made an even bigger cut than estimated by the secondary sources, reducing January output by more than 700,000 bpd to 9.748 million bpd - lower than called for under the OPEC deal.
But high compliance had been expected and the report failed to push oil prices into positive territory."The good compliance rate of OPEC seems to be priced in. The U.S. rig count from Friday is weighing, the numbers support the shale comeback story," said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.
U.S. oil drillers over the past month have added the most drilling rigs since 2012, bringing the total to 591 rigs, the highest since October 2015, oil services company Baker Hughes said in a weekly report.Speculators cut net long positions on Brent last week by 10,000 contracts, weekly ICE data showed, highlighting investor concerns about rising U.S. production. Analysts at ABN Amro are skeptical about OPEC production cuts delivering higher oil prices and reduced Brent forecasts for the first half of this year to $50 from $55 a barrel. (Additional reporting by Karolin Schaps in London and Henning Gloystein in Singapore; Editing by Jane Merriman and Marguerita Choy)
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Updated Date: Feb 14, 2017 00:15:06 IST