US crude set for worst day in three weeks despite Opec deal

US crude oil declined more than 3 per cent on Thursday, leaving it poised for its steepest decline in three weeks, after Opec’s extension of supply curbs failed to spark enthusiasm among investors.

West Texas Intermediate slid 3.2 per cent to $49.71 a barrel, while international marker Brent dropped 3 per cent to $52.32 a barrel, in mid-day trading in the US.

The selling pressure came even after Opec said it will extend its production cuts until March 2018. Other major exporters, including Russia, that agreed to the initial pact in November were also expected to join-in.

Still, commodities analysts remained concerned that a pick-up in US production that has come as prices have stablised near the $50 a barrel range may keep supplies high.

The decline on Thursday “is partly because crude had already run higher in anticipation of the deal, partly because some analysts had been hoping for a deeper cut and partly because US shale oil production is surging again, encouraged by crude’s advance from its lows under $30 in early 2016,” said Russ Mould, investment director at AJ Bell.

The bearish sentiment also pervaded the equities market. The S&P 500 energy index dropped 1.26 per cent, compared with a rise of 0.33 per cent for the broader benchmark. Exploration and production groups faced stronger pressure, with Marathon Oil leading the way lower with a 4.3 per cent drop.

Foreign exchange traders also responded, sending the Canadian dollar, one of the main commodities currencies, sliding 0.35 per cent against the dollar. The Russian rouble was off 0.27 per cent against the buck.