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Seoul - Oil drifted lower, trading below $50 a barrel and extending last week’s drop after OPEC underwhelmed investors with its production-cut extension deal.

Futures slipped in New York. Prices closed 1.1 percent lower last week after OPEC agreed to extend the crude output curb by nine months, the most predictable outcome. 

Saudi Arabia’s Energy Minister Khalid Al-Falih said the strategy is working and global stockpiles will drop faster in the third quarter. US explorers added two rigs last week to 722, the highest level since April 2015, Baker Hughes said Friday.

“We will see oil production tightening from the third quarter and it’s highly likely that prices will rebound,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone in Seoul. “What’s concerning is what happens after the nine-month agreement because there isn’t an exit plan, while US producers will probably boost output at least until the second half of this year.”

Oil in New York clawed back from its tumble toward $45 in the run up to the meeting in Vienna as Saudi Arabia and Russia rallied support for the deal. Meanwhile, US inventories dropped seven weeks in a row, though they still remain above the five-year average and production rose to the highest since August 2015.

West Texas Intermediate for July delivery traded at $49.67 a barrel on the New York Mercantile Exchange, down 13 cents, at 2:03 p.m. in Singapore. Total volume traded was about 15 percent below the 100-day average. Prices rose 90 cents to close at $49.80 on Friday. 

US Rigs

Brent for July settlement was at $52.05 a barrel on the London-based ICE Futures Europe exchange, down 10 cents. The contract gained 69 cents, or 1.3 percent, to settle at $52.15 on Friday. The global benchmark crude traded at a premium of $2.36 to WTI.

Read also: Oil falls to one-week low

Rigs targeting crude in the US increased for a 19th straight week in the longest streak of gains since August 2011, according to Baker Hughes data. While the number of working rigs has more than doubled from last year’s low of 316, it was the smallest increase this year. Drillers in the D-J/Niobrara Basin in Colorado led the growth last week, adding 4 for a total of 27 oil rigs in the region.

Oil-market news

The market overreacted to OPEC’s decision to extend the production curbs, and the global crude market is heading toward balance in the second half of this year, Japan’s Cosmo Oil said in an emailed response to questions.

Hedge funds’ WTI net-long positions the difference between bets on a price rise and wagers on a drop rose 20 percent in the week ended May 23, according to the CFTC data on futures and options.