Oil prices slide on higher U.S. supply

New York : Oil prices fell more than a dollar yesterday, with U.S. crude easing from two-year highs on prospects of higher supply, and uncertainty about Russia’s resolve to join in extending output cuts ahead of this week’s OPEC meeting.

U.S. light crude was down $1.21 or 2 per cent to $57.74 a barrel by 11:25 a.m. EDT (16:25 GMT). Brent crude oil was down 51 cents or 0.8pc to $63.35 a barrel.

Oil prices have risen sharply in recent months due to output cuts by the Organization of the Petroleum Exporting Countries, Russia and other producers. However, higher prices have encouraged greater output among U.S.
producers.

OPEC and its allies cut production by 1.8 million bpd in January and have agreed to hold down output until March. OPEC meets on Thursday to discuss policy and most analysts expect a deal to extend the cuts.

On Friday, Russia said it was ready to support extending an output cut deal. Still, Russia has not given a timeline for extending output cuts, and on Monday there were signs Russia may find it hard to comply.

Oil output from Russia’s Sakhalin-1 project is set to rise by about a quarter to 250,000-260,000 barrels per day (bpd) from January, sources with knowledge of the plan said.

“It’s the OPEC parlour game that we’re all playing,” said John Kilduff, partner at Again Capital LLC in New York, “The Russians being quiet about their intentions about the OPEC deal is a little unsettling.”

U.S. crude oil production has risen by 15pc since mid-2016 to 9.66 million barrels per day (bpd), not far from top producers Russia and Saudi Arabia. Rising drilling activity means output should grow further.