Oil prices drop as OPEC extends production cuts
- Author: Zachary Reyes May 31, 2017,
May 31, 2017, 2:43
Global crude producers are trying to adapt to a new world in which USA shale production is profitable at $40 to $50 per barrel, Yergin told CNBC's "Squawk Box" on Friday, a day after OPEC and non-OPEC players agreed to extend cuts in output by nine months to March 2018.
Less oil on the market normally means higher value per barrel.
Asian shares also fell, while USA stock futures slipped. The Standard & Poor's 500 index rose 0.4 percent to 2,415.07. Further, the sterling fell on a poll showing the ruling Conservatives' lead shrinking, two weeks before an election.
Prime Minister Theresa May has said a big win would strengthen her hand in Brexit negotiations.
USA unemployment data that showed a tightening labor market was offset by a widening goods trade deficit in April and news of declining inventories, prompting analysts to pare their second-quarter economic growth estimates.
With the exception of London's FTSE, most major European bourses were down more than 0.5 percent. Japan's Nikkei closed 0.6 percent lower.
OPEC and non-members led by Russian Federation on Thursday chose to extend cuts in oil output by nine months to March 2018 as they battle a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.
In the OPEC meeting on Thursday in Viennaand some OPEC members and non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018. But that disappointed investors betting on longer or larger curbs.
Clawing back some of Thursday's losses, global benchmark Brent futures were up 28c at $51.74 a barrel at 8.37am GMT.
U.S. West Texas Intermediate (WTI) crude futures traded at $48.59 a barrel, down 31 cents day on the day.
"Following the meeting, we have seen both Brent and WTI trading lower on the news as a proportion of the market had priced in the potential for deeper cuts".
WisdomTree ETF strategist Nizam Hamid said: "The falls may provide a buying opportunity for investors who believe in the long-term story for oil, but they also highlight the environment of heightened volatility which the commodity is facing". The euro rose to $1.1204 from $1.1209.
The weaker dollar and pullback in risk appetite were a boon for gold.
In other sectors, Hikma Pharmaceuticals rose 1.5 percent, GlaxoSmithKline grew 1.12 percent and Unilever up 0.48 percent.