Oil prices rose Monday morning following an unexpected fall in the number of U.S. rigs drilling for crude.
Light, sweet crude for January delivery gained 29 cents, or 0.5%, to $57.59 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 42 cents, or 0.7%, to $63.65 a barrel.
Baker Hughes Inc. reported late Friday the number of active oil drilling rigs in the U.S. was down by four, at 747 last week. The decline followed increases during the preceding three weeks.
“On a very healthy price, you have oil rigs coming down compared with a previous count — they should be adding rigs at this current [price] level, ” said Georgi Slavov, head of research at brokerage Marex Spectron.
Mr. Slavov said that as a result of efforts by the Organization of the Petroleum Exporting Countries to limit supply through production curbs, the market is being perceived as fairly tight.
“Therefore, any news on limiting supply further would make the market react to the upside,” he explained.
OPEC and 10 producers outside the cartel, including Russia, agreed late last month to continue holding back nearly 2% of crude production from the global market through the end of next year. The deal was first agreed a year ago with the aim of alleviating a supply glut that has plagued oil markets since 2014.
Oil prices have risen more than 20% since September, helped by the OPEC-led deal and renewed geopolitical risks to global supply.
Oil prices had been boosted last week by the closure of the Forties Pipeline System in the North Sea after operator Ineos discovered a crack in a pipe. The outage, would could last for a few weeks, stops the flow of around 450,000 barrels of North Sea oil a day.
Oil market observers this week are looking ahead to weekly U.S. data on petroleum inventories Wednesday. But after that, “trading activity is going to start to slow” ahead of the Christmas holiday, said Olivier Jakob, head of energy consultancy Petromatrix.
Gasoline futures rose 1.3% to $1.6758 a gallon and diesel futures advanced 1.7% to $1.9350 a gallon.
SOURCE: FOXBUSINESS & Christopher Alessi WSJ
Compiled and Published by GIB KNIGHT
Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.