USA crude slips 57 cents, retreating from mid-2015 highs

More Concern About Undersupplied Crude Market in Wake of OPEC Achieving 128 Percent Cutback Compliance

But the number of rigs drilling oil wells in the USA dropped by five last week, according to oil-field services firm Baker Hughes, helping bolster prices Monday.

Meanwhile, traders kept a close eye on the political tensions in Iran. A simmering power struggle in Iran has raised anxieties over the stability of OPEC's third-largest crude producer.

Crude oil prices fell Friday, dropping from highs last seen in 2015, as soaring US production undermined a 10% rally from December lows that were driven by tightening supply and political tensions in OPEC member Iran, Reuters reported.

"There is still some support in the market from the situation in Iran", John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. Output curbs by the Organization of Petroleum Exporting Countries and allied suppliers have buoyed prices, with producers promising to continue the curbs for all of 2018. Yet at current prices levels, "a significant portion of shale production is viable and profitable".

WTI for February delivery was at $61.59 a barrel on the New York Mercantile Exchange, up 15 cents, as of 2pm in Seoul. Total volume traded was about 8 percent below the 100-day average.

Brent crude futures were at $67.78 a barrel, 16 cents above their last close. According to the document, “the country has been suffering from a spiraling economic, political and humanitarian crisis, with the state oil company PDVSA cutting funds, personnel and equipment and affected by the sanctions of the United States, which restrict their financing.” The Administration of Donald Trump issued financial sanctions in August against the Venezuelan government and PDVSA, which prohibited U.S. companies from negotiating new debt issued by the Venezuelan state and its state oil company.

Oil traded above $61 a barrel as signs of slowing USA drilling added to optimism that the global crude surplus is abating. The rig count eased by five in the week to January 5 to 742, according to data from oil services firm Baker Hughes.

The senior OPEC source said that while more US sanctions on Iranian oil were possible, they would take time to affect oil supplies and so their impact was hard to gauge.

Only Russia and Saudi Arabia produce more.

United States production is expected soon to rise above 10 million barrels per day, largely thanks to soaring output from shale drillers, according to federal energy data. To contact the reporter on this story: Jessica Summers in NY at jsummers24@bloomberg.net. Off-topic, inappropriate or insulting comments will be removed.

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