NEW YORK (DTN) -- New York Mercantile Exchange oil futures moved lower on Monday morning, giving back most of Friday's gains amid rising domestic oil production and uncertainty about last week's decision by the world's biggest oil producers to extend their production cuts for the rest of 2018.
Houston-based oil services company Baker Hughes on Friday reported the number of active U.S. oil rigs rose by two to 749 last week, while 272 higher than the comparable year-ago period.
That report suggested domestic production would continue higher and it came after the Energy Information Administration reported U.S. crude production rose 24,000 barrels per day (bpd) to a fresh 46-year high of 9.682 million bpd during the week-ended Nov. 24, up 983,000 bpd versus same time frame in 2016.
This morning, Saudi Arabian Energy Minister Khalid al-Falih said the Organization of Petroleum Exporting Countries would discuss when they would start raising production in June since market outlook will have become clearer by then.
The comment appears to undercut last week's decision by OPEC and their 10 non-OPEC producer allies to extend 1.8 million bpd in production to December 2018. The production agreement announced on Thursday, Nov. 30, was meant to eliminate global oversupply.
Investors betting on higher prices are weary of any move to undermine the supply agreement, and are expected to keep an eye on compliance by OPEC members with the terms of their agreement, said analysts.
The decision to go for a nine-month extension of the supply cutbacks was based largely on expectation it may take time for OPEC and non-OPEC producers to achieve their goal. However, there were initial dispute, with Russia wanting an exit strategy before backing the supply deal.
The Kremlin was getting complaints from their oil executives that they were being hurt by the supply agreement, and so OPEC agreed to review the decision at its June meeting in Vienna.
At last look, NYMEX January West Texas Intermediate crude oil futures were 69 cents lower at $57.67 per barrel (bbl) after inside trade. ICE February Brent crude was 75 cents lower at $62.98 bbl, trading at a $5.31 premium to the WTI contract.
NYMEX January ULSD futures dropped 3.21 cents to $1.9092 gallon after inside trade, with January RBOB futures down 3.27 cents to $1.7089 gallon, near a $1.7045 five-week spot low. Short-term trend is low for the oil futures complex, with the RBOB contract breaching support at $1.7121.
George Orwel can be reached at firstname.lastname@example.org
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