Energy shares lead Asian stock losses as oil falls under $45

Energy shares lead Asian stock losses as oil falls under $45

US oil production "continues to grow hand over fist, and the market will remain well oversupplied given the lack of" demand for gasoline and diesel, Roberto Friedlander, head of energy trading at Seaport Global Securities, told CNBC.

U.S. West Texas Intermediate (WTI) crude futures were at $46.85 per barrel, up 63 cents, or 1.36 percent.

Oil slumped to a five-month low of $43.76 a barrel in NY on Friday and traded at $46.18 at 10:27 a.m. local time. The contract lost $2.30 on Thursday.

But analysts say non-OPEC members may struggle to extend production cuts.

With OPEC already showing near-perfect compliance in delivering its pledged 1.2 million barrel-a-day production cut and an extension looking likely, the group has little ammunition left in its battle to raise prices.

Opec's deal in November, and subsequent supply cuts agreed by other oil producing countries, helped to boost prices earlier this year, said David Hunter, an energy industry analyst with Schneider Electric. The accord is an indication and recognition by all conventional oil producers that OPEC, alone is no more in a position to manage and global oil market.

While OPEC's curbs drove oil in early January to the highest since July 2015, that increase encouraged US drillers to pump more.

Oil slid below US$45 a barrel for the first time since OPEC agreed to cut output in November previous year, as USA shale confounds the producer group's attempts to prop up prices.

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On December 10, 11 non-OPEC countries, including Russian Federation, joined the deal pledging to cut oil output by 558,000 barrels per day for six months from January 2017.

Those elevated inventory levels have weighed on sentiment in recent weeks, contributing to a sell-off in the oil market that shaved about $8 off the price of benchmark US crude in the last three weeks.

"It is now-or-never for oil bulls", said United States commodity analysis firm The Schork Report. America will drive and decide the future crude oil market. Low oil prices have hammered the economy across Scottish cities dependent on oil revenue, putting many oil workers out of jobs and squeezing service providers and local businesses.

OPEC and non-OPEC producers agreed in December to cut supplies for six months, helping lift oil prices to about 55 dollars a barrel after a two-year slump.

The Platts OPEC survey for April, released Thursday, found that the 10 members required to lower output under the deal achieved 105% of their cuts. US rig count data from Baker Hughes (BHI) is scheduled to come out later in Friday's trading session.

The industry is now awaiting an update from OPEC, due at the end of this month, on whether the cuts will be extended any further than the July 1 deadline. The sub-$50 per barrel price can be partly attributed to increasing crude oil stocks.

Crashing oil prices in late 2015 and early 2016 dealt a blow to the USA shale industry. OPEC output has declined for several straight months while Russian Federation, the largest non-OPEC producer, has been trimming production since late 2016.

Analysts at Vienna-based JBC Energy said the market moved into serious liquidation mode over the last 24 hours, with Brent at least temporarily down $4 per barrel, within just that small period of time.