LONDON: Oil rose for a third straight session on Monday, as speculators took advantage of last week’s drop to seven-month lows, although a relentless increase in US supply and little evidence of a widespread drop in global inventories capped gains. Investors in US crude futures and options have increased their bets against a further rise in prices, just as the number of US oil rigs in operation hit its highest in over three years.
US shale oil output is up around 10 per cent since last year, and, together with increases from the likes of Brazil, threatens to scupper the efforts of the Organization of the Petroleum Exporting Countries and its partners to force a drawdown in global oil inventories via production cuts. Brent crude futures were up 48 cents at $46.02 per barrel by 0836 GMT. The price is still on track for a near 20 per cent drop in the first half of the year, having hit a trough of $44.35 on June 21, its lowest since November.
US West Texas Intermediate crude futures were up 47 cents at $43.48 per barrel. “We saw this continued big rise in oil rigs last week and in our view we don’t need a single additional rig for the next 12 months in the US space if we look at balance for 2018,” SEB strategist Bjarne Schieldrop said. “I don’t think Opec is going to cut deeper, at least not for now. I think it’s keeping its fingers crossed and looking forward to Q3 and Q4 and hoping their medicine will do the trick.”
Opec and 11 rival exporters agreed in May to extend a 1.8-million-barrels-per-day (bpd) cut in output to March 2018, in the hope that it will force global supply and demand to align. — Reuters