Crude oil remains under pressure as United States producers push prices downward

Crude oil is down for a fifth day and with we are seeing signs of this weakness spreading to the stock market. Brent crude futures gained 7 cents to $51.42 a barrel, having settled down 2 cents on Monday after dipping as low as $50.85.

The OPEC-Russia production cut accord is good only until June, after which they were considering a six-month extension in order to burn through global stockpiles and stabilize prices.

India’s oil imports from Iran rose almost 17 percent in February from a month earlier as refiners received less crude from key OPEC producers Saudi Arabia and Iraq after an OPEC deal to cut output, shipping data showed on Monday.

According to OPEC, total production for the cartel is still falling, down to 31,958 million barrels in February from 32,097 million barrels per day in January.

West Texas Intermediate (WTI) crude oil, the main U.S. benchmark, was trading 0.01% lower at $53.98 per barrel recently while Brent crude, the worldwide gauge, was 0.02% higher at $56.52 per barrel. But rapid advances in technology have seen in the USA unconventional oil sector emerge much more resilient to lower oil prices than anyone expected.

Bloomberg reports that U.S. crude stockpiles increased by nearly three million barrels in one week. Rigs targeting crude in the US climbed to the highest since September 2015.

A fall in oil prices will drastically reduce Nigeria’s revenue and consequently hurt the implementation of the 2017 budget.

Energy stocks have been somewhat resilient in the face of plunging oil prices, but some traders may throw in the towel if USA inventories continue to rise.

On the domestic front, the crude oil futures contract on the Multi Commodity Exchange (MCX) also plummeted 9 per cent from ₹3,556 per barrel to ₹3,229 per barrel last week. West Texas Intermediate for April delivery fell 0.37 percent to $48.31 a barrel on the New York Mercantile Exchange. At 1640 Eastern Time, the benchmark US future was trading at $47.30, down 2.3% on the day. While compliance to the agreed cuts has been high within Opec, there are question marks over Russia’s commitment in the first two months. And according to the secondary sources, Saudi actually cut output further in February to 9.797 million barrels a day.

US crude stockpiles probably increased by 3 MMbbl for a 10th week of gains, according to a Bloomberg survey before data from the EIA on Wednesday. It now believes US oil flow will grow by 340,000 barrels a day based on the rising number of active oil drilling rigs in USA oil patches.