Oil prices edge higher as U.S. rig count falls

Crude-oil futures edged higher in Asian trade Monday, after data released over the weekend showed a further decline in the number of oil rigs operating in the U.S., a sign producers are making some effort to cut back supply amid low prices.

Light, sweet crude futures for delivery in October CLV5, +1.34%  traded at $45.20 a barrel on the New York Mercantile Exchange, up $0.62, or 1.4%, in the Globex electronic session. November Brent crude LCOX5, +1.10%  on London’s ICE Futures exchange rose $0.57, or 1.1%, to $48.02 a barrel.

Over the weekend, a Baker Hughes report indicated the U.S. oil-rig count fell by eight to 644 in the last reporting week, the third-straight weekly decline. The rig count is seen as an indicator of future oil production, and is closely watched by market participants given the importance of U.S. supply to global oil balances.

Last week, data from the U.S. Department of Energy showed U.S. crude stockpiles had fallen by 2.1 million barrels in the week earlier, compared with an increase of 1.1 million barrels forecast by analysts. However, stockpiles of petroleum products rose, putting the total amount of crude oil and refined products in commercial storage at an all-time high of 1.3 billion barrels.

“We can see the market is stabilizing after the extreme volatility in August when there was an overshoot on the downside. The panic mode has slowly subsided but it’s not over,” said Vyanne Lai, an analyst at National Australia Bank.

Signs that oil supply remains ample kept prices largely in the doldrums last week, with Nymex crude eking out a 0.11% gain, while Brent crude lost 3.20% or $1.57 per barrel. Nymex crude has risen for three of the past four weeks while Brent crude has fallen three weeks in a row; both oil benchmarks are down by around 16-17% year-to-date.

“The general slow-down in Asian economies, particular China, is also keeping the prices low due to lower demand,” said Virendra Chauhan, an oil analyst at Energy Aspects, adding that while the Federal Reserve’s decision last week to hold interest rates steady was positive news for importers using foreign currencies, “the uncertainty of what’s to come later in the year is a concern for many regional traders.”

Nymex reformulated gasoline blendstock for October RBV5, +1.26%  — the benchmark gasoline contract — rose 151 points to $1.3713 a gallon, while October diesel traded at $1.5012, 105 points higher.

ICE gasoil for October changed hands at $460.50 a metric ton, down $2.75 from Friday’s settlement.

source: marketwatch.com