Crude prices dipped over a percent on Monday, as investors lose confidence in oil following strong drilling data from the United States and pessimism about OPEC-led output cuts. May Brent crude LCOK7, -0.14% gave up 14 cents, or 0.3%, to $51.62 a barrel on the ICE Futures exchange in London. The U.S. West Texas Intermediate has declined by a massive 7.25% to around $47.95 per barrel.
However, if OPEC doesn't extend its deal, it could pressure crude oil prices.
Is It the Beginning of a Bear Market for Crude Oil?
Prices also failed to strengthen after Saudi Arabia Minister Khalid al-Falih said on Thursday the cuts by the OPEC and non-OPEC producers could be extended beyond June if oil stockpiles stayed above long-term averages.
The Organization of the Petroleum Exporting Countries (OPEC) is curbing its output by about 1.2 million barrels per day (bpd) from January 1, the group's first reduction in eight years. "The OPEC cuts were good enough to prevent a repeat of the glut of previous year, but it's a different story if you want to have oil at US$60 or US$70".
Lower crude oil prices have a negative impact on oil and gas producers' earnings such as Noble Energy (NBL), Chevron (CVX), Northern Oil & Gas (NOG), and Triangle Petroleum (TPLM).
After spending much of 2016 near multiyear lows, oil prices began to rally in late November as it became clear that OPEC would finally cut production to address a long-standing oil glut.
Crude oil prices settled higher in futures market on Friday to tally a weekly gain, even as data showed a significant increase in the number of active US oil rigs, implying the potential for a further climb in domestic crude production.
The first issue that has dragged oil prices down is that US inventories have continued to rise year to date.
However, most of the investors that had expected oil prices to book decent gains in response to the output cuts would have had their hopes dashed in the last couple of weeks.
Meanwhile, the deal between Opec and non-Opec producers, which was agreed late past year and aimed to curb production, appears to be having little effect on the glut at the moment, with three of the last four weeks showing substantial inventory increases. Crude oil inventories have risen by ~50 million barrels in the USA so far this year.
Kim Jong Un watches ground jet test of new high-thrust engine
A North Korean military unit tasked with striking U.S. bases in Japan was involved in those launches, the state news agency said. During his visit to Seoul , Tillerson admitted that Washington's "strategic patience" policy toward Pyongyang was over.