Oil prices fell as much as 2 percent on Monday on news of the impending restart of Britain’s Buzzard oilfield, and U.S. crude slid below $50 per barrel, which triggered technical selling.
Earlier, oil was pressured by news that Iraq wanted to be exempt from a production cut by the Organization of the Petroleum Exporting Countries (OPEC).
Buzzard, the North Sea field that contributes to the Forties crude stream and which pumps about 180,000 barrels per day (bpd), will restart on Tuesday or Wednesday, from a month-long planned maintenance, an industry source said. The Forties stream influences pricing for international crude benchmark Brent.
“Obviously, it means increased supply for Brent versus what had been the status quo,” said David Thompson, executive vice-president at Powerhouse, a commodities-focused brokerage in Washington.
“Also, you’ve been moving down steadily on the Iraq news that had been dominating the market earlier and this comes on top of it.”
Brent was down $1, or 1.9 percent, at $50.78 a barrel by 1:10 p.m. EDT (1710 GMT). Its session low was $50.50.
U.S. West Texas Intermediate (WTI) crude fell 99 cents, or 2 percent, to $49.86, after hitting a session low at $49.62.
It was the first time since Oct. 18 that WTI had traded below $50.
“We’re seeing some length exiting the market,” Pete Donovan, broker at New York’s Liquidity Energy said, referring to the gain of more than 10 percent in crude prices over the past month since OPEC announced plans for its first output cut in eight years.
Stig Rasmussen, senior proprietary trader at Danske Commodities in Aarhus, Denmark, said steeper losses might be in store if U.S. crude did not return to $50 soon. “Probably a lot of new longs are going to stop out if you close below 49 on WTI.”
Iraqi oil minister Jabar Ali al-Luaibi said the second-largest producer in OPEC wanted to be exempt from output curbs as it needed more money to fight Islamic State militants.
Oil fell on the remarks, but losses were limited by higher equity prices on Wall Street and by data from energy monitoring firm Genscape showing a weekly draw of about 1.0 million barrels of crude at the Cushing, Oklahoma, delivery hub for WTI.
OPEC hopes to remove about 700,000 bpd from an estimated global supply of 1.0-1.5 million bpd. Details of how much each member should cut have been left to its meeting in Vienna on Nov. 30.