U.S. Shale Oil Production Is Undermining OPEC's Production Cuts

© Lucy Nicholson / Reuters

Bloomberg: Oil Drops as U.S. Drilling Growth Threatens to Counter OPEC Cuts

* U.S. shale producers extend drilling expansion into 10th month
* Saudis ready to prolong output curbs if inventories stay high

Oil fell as U.S. drilling continued to rise, undermining the potential for even an extended OPEC output-reduction deal to rebalance the market.

Futures lost as much as 1.9 percent in New York after gaining 0.6 percent last week. Producers added more oil rigs to U.S. fields, extending a drilling surge into a 10th month, Baker Hughes Inc. said on Friday. Saudi Arabia is ready to extend cuts if supplies stay above the five-year average, Energy Minister Khalid Al-Falih said in an interview on Bloomberg Television last week.

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WNU Editor: Further proof that that higher oil prices are not going to happen soon.