Oil slides again on doubts over duration of output cut

Pump jacks are seen in the Lost Hills Oil Field, California

By David Gaffen

NEW YORK (Reuters) – Oil resumed its slide on Monday as investors remained uncertain whether producing nations will extend an OPEC-led output cut beyond the end of June in an effort to reduce a global glut of crude.

On Sunday, a committee of ministers from OPEC and outside producers agreed to look at prolonging the deal, stopping short of an earlier draft statement that recommended keeping the measure in place.

Oil prices have been falling since the middle of the month, as a spate of reports showing stronger-than-expected growth in U.S. inventories sparked selling from speculators that had build record long positions in crude futures.

Last week’s futures data showed speculators were still unwinding long positions as high U.S. inventories offset cuts from other oil producers. Long positions as of last Tuesday were at their lowest since December.

A number of ministers from the Organization of the Petroleum Exporting Countries and other producers met in Kuwait to review progress of their supply cut.

“When you look at the last two-and-a-half weeks we’ve moved into a sliding pattern vs. the sideways trend we have seen for much of the year,” said Michael Train, director of global energy strategy at RBC Capital Markets.

U.S. crude was down 38 cents at $47.60 a barrel, a 0.8 percent drop, as of 11:22 a.m. EDT (1622 GMT). International benchmark Brent crude fell 39 cents to $50.60. Brent’s session low was $50.03.

The discount of U.S. crude to Brent has grown to around $2.90 per barrel, heading for its widest close since late 2015.

In December, OPEC and 11 other producers including Russia agreed to reduce combined output by almost 1.8 million barrels per day in the first half of this year.

While many in OPEC have called for prolonging the curbs, Russia has been less definitive. Energy Minister Alexander Novak said on Sunday it was too early to make that call.

“We would see the relative lack of reaction in the price perhaps as a reflection of some disappointment that nothing more concrete was forthcoming,” analysts at JBC Energy said in a report, referring to the conclusion of Sunday’s talks.

Oil also came under pressure from further evidence that the OPEC-led supply cut had lifted prices enough to help boost output in the United States.

U.S. drillers added oil rigs for a 10th week in a row, data from energy services firm Baker Hughes showed on Friday.

Still, Goldman Sachs said the market was rebalancing and it may not be necessary to keep output curbed.

(Additional reporting by Alex Lawler in London and Henning Gloystein in Singapore; Editing by David Gregorio)