Crude-oil futures settled below $50 a barrel on Monday amid investor concerns about excess crude supply in U.S. markets, but cold weather and a refinery strike fed a 5% rally in heating-oil prices. On the New York Mercantile Exchange, crude for delivery in April lost $1.36, or 2.7%, to settle at $49.45 a barrel. April Brent crude lost $1.32, or 2.2%, to end at $58.90 a barrel on London’s ICE Futures exchange. Nymex crude declined 4.6% last week, dropping more than Brent crude, which fell 2.1%.
On Friday, Baker Hughes reported a weekly drop in the number of rigs actively drilling for oil and natural gas in the U.S., but the fall in activity was “not as fast as traders had been hoping,” said Colin Cieszynski, chief market strategist at CMC Markets. The impact of fewer U.S. drilling rigs will be seen only later this year, according to analysts at BNP. The changes are more marked in the second half of the year, consistent with the time lag between lower drilling activity and production, they said.
Adding further pressure on oil prices Monday, Libya’s largest oil field at Sarir resumed operations on Sunday after a pipeline was blown up about a week ago by unknown militants, and the key oil export terminal at Zueitina in eastern Libya also restarted operations. But traders appeared unfazed by a report Monday from the Financial Times which said members of the Organization of the Petroleum Exporting Countries have discussed holding an emergency meeting if crude continues to slide.
Meanwhile, the oil market expects to see crude supplies grow as refineries deal with an expansion of a nearly monthlong strike of workers. The strike comes as the refineries are starting their spring maintenance period. Over the weekend, Union workers walked out of three more U.S. refineries, including the nation’s largest fuel-making facility — the Motiva Port Arthur Refinery in Texas. Heating-oil prices climbed on the back of the refinery strike, which raised concerns over production levels for the petroleum product. March heating oil jumped 10.6 cents, or 5%, to settle at $2.218 a gallon, on the heels of a 5.9% jump on Friday.
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