Oil Prices Gain After U.S. Rig Decline
December 18 2017 - 11:12AM
Dow Jones News
By Christopher Alessi
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.
Stephanie Yang contributed to this article
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
December 18, 2017 10:57 ET (15:57 GMT)
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