Futures slid as much as 1.5 percent in New York after decreasing 1.9 percent Friday. Drillers put one rig back to work last week, marking the first addition since late last year, according to data from Baker Hughes Inc. Ecuador will propose a cut to output at a meeting next month of producers from within and outside OPEC to help boost prices, President Rafael Correa told reporters in southern Andean province of Morona Santiago.
“There is a bit of a correction after the spike above $40 because the market is still oversupplied and demand is sluggish, although it's better than what it was,” Evan Lucas, a market strategist at IG Ltd. in Melbourne, said by phone. “An average of around $35 a barrel is likely in the second quarter. There are signs that the supply side is feeling the pinch and have been forced to act.”
Oil has recouped its losses this year after slumping to a 12-year low last month on speculation stronger demand and falling U.S. output will ease a surplus. Hedge funds and other speculators increased their net-long position in West Texas Intermediate futures and options by 17 percent in the week ended March 15 to the highest since June, US Commodity Futures Trading Commission data show.
WTI for April delivery, which expires Monday, fell as much as 58 cents to $38.86 a barrel on the New York Mercantile Exchange and was at $38.98 at 10:29 a.m. Hong Kong time. Prices lost 76 cents to $39.44 a barrel on Friday, a day after rising to $40.20, the highest level since Dec. 3. Total volume traded was about 30 percent below the 100-day average. The more-active May futures were 34 cents lower at $40.80 a barrel.
Brent for May settlement dropped as much as 36 cents, or 0.9 percent, to $40.84 a barrel on the London-based ICE Futures Europe exchange. The contract fell 34 cents to $41.20 on Friday. The global benchmark crude was at a premium of 15 cents to WTI for May.
The US drill rig count rose to 387, climbing from the lowest level since December 2009, according to data Friday from Baker Hughes. The nation's crude stockpiles have increased to 523.2 million barrels, the most in more than eight decades, according to the Energy Information Administration.
WTI longs and output freeze news:
* Speculators increased their net-long positions WTI futures and options combined by 29,602 to 204,551 lots, according to CFTC data.
* Ecuador will propose an output cut for all producers except Iran at the April 17 meeting, Correa told reporters. - Bloomberg
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