Oil News: Oil Inches Up as US, Canada Trim Rigs
OIL NEWS – On Monday, oil prices inched up as the United States and Canada cut their crude drillings rigs. This action of the two countries was part of the effort in limiting the output on fears of a global oversupply.
As of 11:07 PM ET (04:07 GMT), the February delivery of Crude Oil WTI Futures inched up 0.23% to $51.59 a barrel. This was based on the New York Mercantile Exchange. Meanwhile, the February delivery for the Brent Oil Futures added 0.08% to $60.33 per barrel, according to London’s Intercontinental Exchange.
As of December 14, there was a reduction of 11 oil rigs in North America. This was in comparison with the trimming of the US to four rigs and Canada by seven last week. According to Baker Hughes and YCharts, United States’ total count of drillers was down in its lowest for two months. Meanwhile, Canada declined into lows for six months.
“Oil is finding support as the drop in Baker Hughes rig counts points to a near-term slowdown in U.S. production. This, when combined with [expectations] Saudi Arabia…is to cut exports to the U.S. to draw down inventory builds (there) should provide a short-term base despite global slowdown fears, which continue to resonate,” said Stephen Innes, Oanda head of trading for APAC.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) held its meeting in early January. During the meeting, the oil producers’ club and its members have come up with a decision. They will trim their output from January and this lifts the prices of oil.
Oil News: Fears of oversupply pressure oil prices
Although oil prices were broadly stable on Monday, they were still under pressure. This was amid the growth slowdown of major economies and oversupply worries.
As of 0423 GMT, International Brent crude oil futures were at $60.33 per barrel, higher 5 cents or 0.08% from their previous close.
Meanwhile, the US West Texas Intermediate (WTI) crude futures were at $51.33 per barrel, higher 13 cents or 0.25%.
The US’ persistent growth in shale output has remained to weigh on oil prices. However, a few analysts were skeptical as to whether the OPEC’s supply cuts would be sufficient in rebalancing markets.
“I don’t believe OPEC cuts will work this time around with Qatar going out and Iran refusing to cut, while there’s a big question mark when Russia will go to its agreed level. Meanwhile, U.S. production will go on increasing. So the whole load will effectively be on Saudi Arabia, who is under severe pressure from Trump anyway,” said Trifecta Oil Consultancy Director Sukrit Vijayakar.