Crude Slumps 2.8% As High U.S. Output Sparks Selloff
Crude futures settled lower on Friday, as investors continued to question whether OPEC and its allies' global pact to curb output would rein in excess supply, after data showed an uptick in U.S. crude production and a weekly rise in oil rigs.
On the New York Mercantile Exchange crude futures for August delivery lost 2.8% to settle at $44.23 a barrel, while on London's Intercontinental Exchange, Brent fell by 3.08% to trade at $46.65 a barrel.
The number of active U.S. oil rigs climbed by 7 to 763 rigs this week, according to data from Baker Hughes released Friday, confounding some expectations that the rig count would continue to fall, following last week's decline, which was the first drop since January.
The weekly rig count is an important barometer for the drilling industry and serves as a proxy for oil production and oil services demand.
Adding to negative sentiment on oil, was a report from the Energy Information Administration showing that total U.S. production edged up by 88,000 barrels to 9.338 million barrels a day.
The slump in crude prices comes a day after investors' hopes that OPEC and its allies' efforts to rein in excess supply were dashed, as the oil-cartel's exports rose in May for the second month in row.
Despite the current production-cut agreement, OPEC exported 25.92 million barrels per day (bpd) in June, 450,000 bpd more than in May and 1.9 million bpd more than a year earlier.
In May, OPEC and non-OPEC members agreed to extend production cuts for a period of nine months until March, but stuck to production cuts of 1.8 million bpd agreed in November last year.
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