You are here: Home » Reuters » News
Business Standard

Oil edges up towards $49, U.S. drilling slowdown supports

Reuters  |  LONDON 

By Alex Lawler

(Reuters) - edged up to about $49 a barrel on Monday after fewer drilling rigs were added in the United States last week, helping ease concerns that surging shale supplies will undermine OPEC-led production cuts.

U.S. drillers added two rigs in the week to July 14, bringing the total to 765, Baker Hughes said on Friday. Rig additions over the past four weeks averaged five, the slowest pace of growth since November.

A sharp drop in U.S. crude inventories in the week to July 7 supported prices last week. But crude stocks in industrialised nations remained high, putting a brake on the price rally.

"The market is not doing too much today - it feels like wait and see," said Olivier Jakob of analyst Petromatrix. "There is some rebalancing in products, but overall the layers of stocks are still very large."

Brent crude, the benchmark, was up 8 cents at $48.99 a barrel by 1341 GMT. U.S. crude traded at $46.57, up 3 cents.

prices are less than half their mid-2014 level because of a persistent glut, even after the Organization of the Petroleum Exporting Countries with Russia and other non-OPEC producers cut supplies since January.

While OPEC-led cuts have offered prices some support, rising supplies from Nigeria and Libya, two OPEC states exempt from the pact, and increasing U.S. production have weighed on the market.

Kuwait said on Friday the market was on a recovery track due to rising demand and said it was premature to cap Nigerian and Libyan output. An OPEC and non-OPEC committee meets in Russia on July 24 to discuss the impact of the deal.

In a sign of strong demand, data on Monday showed refineries in China increased crude throughput in June to the second highest on record. OPEC is hoping higher demand in the second half will get rid of excess inventories.

"There is almost an agreement that the second half of the year should be tighter than the first half due to significant jumps in demand forecasts," broker PVM said. "The net result is a rise in the demand for OPEC "

(Additional reporting by Henning Gloystein; editing by Edmund Blair and David Clarke)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU