Brent crude and West Texas Intermediate (WTI) oil prices are slipping on ramped up US production

 
Courtney Goldsmith
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Chinese Laborers Work At An Oil Well In Hejian
Oil is marking a sixth day of losses (Source: Getty)

Oil prices have reversed gains made earlier in the day as US drilling concerns overshadow hopes of an extension to the Organisation of the Petroleum Exporting Countries' (Opec) production cuts.

Benchmark Brent crude fell 0.58 per cent to $51.66 a barrel while West Texas Intermediate prices dipped 0.67 per cent to $49.29 at the time of publishing.

Oil clawed back some ground with benchmark prices rising nearly one per cent after hitting one-month lows last week on fears that crude supplies were increasing despite an agreement by Opec and non-Opec nations to cut production by around 1.8m barrels per day (bpd) for the first six months of 2017.

A source told Reuters a panel of Opec and other allied producers recommended extending the cuts for another six months from June, which has bolstered prices somewhat. Saudi Arabia and Kuwait had already showed support for an extension.

However, ramped up US production is curbing the effect of the cuts. US crude production has reached 9.25m bpd, up almost 10 per cent since mid-2016 and approaching levels of Saudi Arabia, Opec's top exporter.

Read more: The end is near for Opec if it doesn't start acting together

"It's a still game of very narrow trading ranges between these mixed drivers," said ABN AMRO's senior energy economist Hans van Cleef.

"If Opec doesn't extend those cut agreements, oil prices will fall under much more pressure."

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