Oil futures settled lower on Monday, pulling back after a strong rally last week, on signs of rising global production.
Kuwait’s crude production is recovering after its recent workers’ strike and output from Iraq has been climbing. Saudi Arabia will reportedly complete its expansion of a major oilfield next month. The country also announced an economic reform plan Monday which aims to reduce the kingdom’s reliance on oil, according to Bloomberg MarketWatch.
West Texas Intermediate crude for delivery in June fell $1.09, or 2.5%, to settle at $42.64 a barrel on the New York Mercantile Exchange.
June Brent crude on London’s ICE Futures Exchange fell 63 cents, or 1.4%, to $44.48 a barrel.
Saudi Arabia’s state-owned Saudi Arabian Oil Co. is set to complete its expansion of its Shaybah oilfield by the end of May, boosting its capacity to 1 million barrels a day from 750,000 barrels.
Meanwhile, Saudi Arabia announced an economic reform plan Monday. The Saudi economy has been crimped by low crude price and the plan is a long-term blueprint for the kingdom’s economic transformation aimed at reducing its dependence on oil.
“Saudi Arabia wants to decrease its dependence on oil by investing in other sectors, and by growing other sectors, not by diminishing its oil activity,” said Omar Al-Ubaydli, a program director at the Bahrain Center for Strategic, International and Energy Studies. “Oil’s relative contribution will diminish, but not its absolute contribution.”
Deputy Crown Prince Mohammed bin Salman said in an interview aired on Saudi news Monday that “by 2020, we’ll be able to live without oil.”
Adding further pressure on oil Monday, Genscape reportedly said that crude inventories at the Cushing, Oklahoma trading hub rose about 1.5 million barrels for the week ended April 22.
May natural gas ended at $2.063 per million British thermal units, down 7.7 cents, or 3.6%.