Brent crude oil could slide below $60/bbl as a surge in USA shipments to Asia threatens to undermine the production cut deal between OPEC and its allies, according to ING analysts, in contrast to bullish views from Goldman Sachs and others who see prices supported as strong demand soaks up supply from the U.S.
Oil held gains above $62 a barrel after USA crude explorers curtailed activity for the first time since January.
"Permian and Bakken shale basins still saw active oil rigs rising by two and three last week, respectively and are likely to keep USA oil production on increasing trend", ING said. In February, even Saudi Arabia's state oil company considered participating in these flows via a us unit, before determining it wasn't economically viable at the time.
"The US economy getting better means oil demand will be stronger". Explorers idled four oil rigs in the US, bringing the total to 796, Baker Hughesdata released Fridayshowed.
Benchmark 10-year notes US10YT=RR last rose 2/32 in price to yield 2.8865 percent, from 2.894 percent on Friday.
U.S. West Texas Intermediate (WTI) crude futures fell $1.21, or 2 percent, to $60.83 per barrel. Total volume traded was about 53 percent below the 100-day average.
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Brent crude futures were at $65.11 a barrel at 9.20am GMT, down 38c from their previous close. The contract climbed 3% to $65.49 on Friday.
TheNewsGuru.com has been following the US economy which added the biggest number of jobs in more than 1-1/2 years in February, with non-farm payrolls jumping by 313,000 jobs last month, the Labor Department said on Friday. The global benchmark traded at a $3.47 premium to May WTI.
Williams also pointed out that based on the figures, USA shale plays this year will "add enough to US production to match all the oil Venezuela now produces".
Bijan Zanganeh, oil minister for Iran, said over the weekend that OPEC could agree in June to begin easing current oil production curbs in 2019; however, he added that working with the cartel to thwart the Americans is vital because "If the price jumps [to] around $70 .it will motivate more production in shale oil in the United States".
Wood Mackenzie Ltd. last week forecast that US crude shipments overseas will soar to nearly 4 million bpd by the mid-2020s, rivaling shipments from Iraq and Canada; and as far as Patterson is concerned, the Middle East won't give up Asia easily. The fallout could drag down prices to under $60, he said. This time, however, the spat is over determining what the best price level is for the commodity. Contributions of 200 words or more will be considered for publication.