Oil Prices Settled A Few Cents Lower


Oil prices settled a few cents lower on Monday, retracing much of an early retreat to three-month lows in a steep slide that began last week as investors wondered whether swelling U.S. crude supplies would hinder OPEC's efforts to restrict output and reduce a global glut. Analysts said the slump may not have much further to go now that prices have fallen more than 8 percent since last Monday, the biggest week-on-week drop in four months.

Prices had risen on more than two months of reduced production from the Organization of the Petroleum Exporting Countries. Now, the market faces evidence that U.S. production remains high and global markets remain oversupplied.

Goldman Sachs said in a note it remained "very confident" about commodity prices and maintained its price forecast of $57.50 for WTI in the second quarter. U.S. drillers added oil rigs for an eighth consecutive week, Baker Hughes data showed on Friday, and they have announced ambitious production growth plans.

OPEC and other major oil producers, including Russia, reached an agreement at the end of November to rein in production by almost 1.8 million barrels per day (bpd) in the first half of 2017. Russia's top oil major Rosneft warned that a recovery in U.S. oil output may deter OPEC and non-OPEC producers from extending production cuts beyond June and might lead to a new price war.

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Suhani Verma

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