By Jessica Resnick-Ault
NEW YORK (Reuters) – Oil prices slipped on Friday, extending losses after data suggested drilling is ramping up in the United States, prompting investor concern about how effective OPEC and other producers will be at supporting prices by cutting supplies.
U.S. crude <CLc1> futures for March delivery settled down 61 cents, or 1.1 percent, at $53.17 a barrel.
Brent was down 72 cents at $55.52 a barrel.
The U.S. weekly oil and gas rig count from Baker Hughes showed that U.S. drillers added 15 oil rigs in the week, the 12th gain in 13 weeks. That brought the total count to 566, the most since November 2015. [RIG/U]
“We’re in a holding pattern at this point in time,” said Mark Watkins, regional investment manager at U.S. Bank Private Client Group. “Supply is a big factor right now and you have the U.S. really filling that gap that OPEC has left open.”
Prices had risen during Asian trading, though activity was thin due to the start of the Lunar New Year holiday in much of that region, including China and Singapore.
The Organization of the Petroleum Exporting Countries and other producers, including Russia, agreed to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017 to relieve a two-year supply overhang.
But U.S. oil production has been rising, with the International Energy Agency forecasting total U.S. output growth of 320,000 bpd in 2017 to an average of 12.8 million bpd.
Fundamental factors affected prices this week, such as gains in Iran’s monthly oil exports in February and resilient production in Libya. A glitch in North Sea Buzzard crude production provided support.
But market participants warned of more volatility ahead as speculators react to even small developments in the physical markets. U.S. Commodity Futures Trading Commission data showed that in the week to Jan. 24, hedge funds and other speculators boosted bullish wagers on U.S. crude oil to the highest since mid 2014.
“Given that speculative net long positions in Brent and WTI are already at a record-high level, the correction potential is therefore growing all the time,” Commerzbank analyst Carsten Fritsch said in a note.
(Additional reporting by Henning Gloystein in Singapore and Libby George in London; Editing by Bernadette Baum and David Gregorio)