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Crude Oil Loses Value as Number of US Oil Rigs Grows

January 27, 2017 at 22:02 by Vladimir Vyun

Future for crude oil fell today, demonstrating the biggest one-day drop in more than a week, as US driller continued to add oil rigs. Baker Hughes reported that the number of US oil rigs increased by 15 last week, showing the 12th increase in 13 weeks. What is more, the current number (566) is the biggest since November 2015.

The news added fuel to concerns that the oil production cut announced by the Organization of Petroleum Exporting Countries last year will be neutralized by rising supply from the United States as US producers will attempt to seize a share of the market from the OPEC. And that, in turn, may prompt some of the OPEC members to cheat on the agreement to avoid losing their share of the market.

Despite the unfavorable fundamentals, Commitments of Traders released by the Commodity Futures Trading Commission showed that hedge funds and other speculators increased bullish bets on crude oil.

Futures for delivery of WTI crude in March sank 1.19% to $53.14 per barrel as of 21:43 GMT on NYMEX today. March contract for Brent oil dropped as much as 1.37% to trade at $55.47 per barrel on ICE.

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