Crude oil prices dropped on Monday as rising in the US rig count last week showed a further rise in American production. Such result could undermine OPEC-led efforts of tightening markets.
OPEC and the other oil producers will be studying the possibility of exiting their international oil supply-cut agreement before June next year. This was based on a statement by Kuwait’s oil minister Essam al-Marzouq on Sunday. Also, according to some traders, such news added more weight on prices.
US West Texas Intermediate (WTI) crude futures were at $57.14 per barrel by 0418 GMT. It fell 0.4 percent, or 22 cents compared to last settlement.
Brent crude futures dropped 0.4 percent or 25 cents, at $63.15 per barrel. Brent is the international benchmark for oil prices.
“The largest concern for investors currently remains the rise in the U.S. rig count, which could potentially jeopardize the OPEC and Russian agreement when they meet for a review in June 2018,” said adviser Shane Chanel.
General Electric Co.’s energy services firm said on Friday that US drilling activity grew higher last week. Data showed that the number of rigs drilling for new oil output rose by two the week leading to December 08 reaching 751.
A higher rig count points to higher US crude production. This follows more than 15 percent of increase since mid-2016 to 9.71 million barrels per day (bpd).
These levels stand close to those of top producers Russia and Saudi Arabia.
Oil traders will be on the lookout this week for the monthly reports from OPEC and the International Energy Agency. The data will let traders assess global oil supply and demand levels as well as determine whether a global rebalancing is happening in the oil market.
US Rig Count Affects Crude Oil in Asia
Increase in US rig count last week also affected the crude oil prices in Asia on Monday.
Oil finished higher last week as crude demand in China showed signs of rising. Despite this, concerns over rising US oil production caused the prices to fall.
Data showing China’s oil imports rising to 9.01 million bpd last month was able to sustain crude futures. The data came from the General Administration of Customs, released on Friday. China set the second highest on record.
According to the data, growing demand will push China ahead of US as this year’s biggest crude importer globally.
BWorldFinance is your primary source of news in the financial market, technology, and more. Visit bworldfinance.com now and get the latest happenings on the market.