Oil falls after failed N Korean missile test, USA rig count gains

US West Texas Intermediate (WTI) crude futures were down 51 US cents at US$52.67 a barrel, after rising 7 US cents to US$53.18 on Thursday.

The Canadian dollar was trading at $1.3280 to the greenback, or 75.30 US cents, stronger than Thursday's close of $1.3328, or 75.05 USA cents.

Trading is expected to remain subdued on Monday as several markets outside North America remain closed for an extended Easter holiday. On the other hand, the United Arab Emirates will reduce output by 139,000 barrels a day, Kuwait by 131,000 barrels a day and non-OPEC member Russian Federation will cut by as much as 300,000 barrels per day.

Iran's Oil Minister Bijan Zanganeh was quoted by the media as saying that most oil producers support an extension of the agreement which was devised by Saudi Arabia a year ago.

The West Texas Intermediate (WTI) benchmark for US crude futures was down 26 cents, or 0.5%, at $52.92 a barrel at 10:53 a.m. ET.

As a result, March's global oil supply fell, according to the International Energy Agency.

The market was sluggish to usher in the week with key trading center London closing to give way for the Easter break. "The drop in tensions following North Korea's failed missile test. have seen oil fade in Asia", said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

Both benchmarks had risen last week for a third consecutive week, with Brent adding 1.2 percent over the four days before the Good Friday holiday and WTI up 1.8 per cent.

$60 barrel prices would allow for additional investment in the global energy sector, without allowing the United States' shale producers too much additional financial leverage to undo the effects of the output cuts.

The subdued start to this week came as markets braced for more geopolitical tensions over North Korea, after its attempted launch on Sunday of a ballistic missile failed as the projectile blew up nearly immediately.

Iran has indicated its support for extending a crucial oil output agreement by world's biggest producers that helped stabilize prices in markets since its implementation early this year.

Fighting in Libya has cut oil output, but state oil company NOC has reopened at least one field.

Meanwhile, oil producers in the US added rigs for a 13th straight week, proof that output increases there will continue unhampered.

Investors should also look out for important data such as the weekly USA crude inventories figures, to gain further insights into the pace of the oil market rebalancing.

Indeed, although the oil market will likely tighten throughout the year, overall non-Opec production, not just in the USA, will soon be on the rise again.

US crude oil production has climbed to 9.24 million barrels per day, according to the latest Energy Information Administration data.

The increasing production largely counteracted figures showing first quarter economic growth of 6.9 percent in China.

  • Anthony Vega