Oil price rises towards $70 on reduced USA drilling activity


The most significant price action this week is likely to take place after the release of the American Petroleum Institute's weekly inventories report on Tuesday and Wednesday's U.S. Energy Information Administration report.

US West Texas Intermediate (WTI) crude futures were at $62.22 a barrel up 18 cents, or 0.3 per cent while Brent crude futures were at $65.70 per barrel, up 21 cents, or 0.3 per cent, from their previous close.

The United States has become the world's no. 2 crude oil producer, ahead of top exporter Saudi Arabia.

WTI settled down 68 cents to $61.36 per barrel while Brent fell 50 cents to $64.99 per barrel.

The report followed data from the EIA last week (http://www.marketwatch.com/story/oil-prices-under-pressure-ahead-of-us-supply-data-2018-03-07), which showed an increase of 86,000 barrels a day in total USA crude output for the week ending March 2.

"From a fundamental standpoint, that is a material concern as the USA oil industry alone could push the global market back into a surplus, which was the reason behind the 2014-2015 bear market in oil", he said in a daily newsletter.

Investors will then be anticipating OPEC's next move as concerns about US production will likely dominate the oil cartel's June meeting in Vienna. Crude oil prices could weaken if the dollar rallies and stocks weaken. At stake is OPEC's production limits, which are among factors helping the oil market's monthslong recovery.

In oil markets, US energy companies, last week, cut oil rigs for the first time in nearly two months, RIG-OL-USA-BHI, with drillers cutting back four rigs, to 796, Baker Hughes (GE.N) energy services firm said on Friday. It was the first such decline in seven weeks.

"Permian and Bakken shale basins still saw active oil rigs rising by 2 and 3 last week, respectively, and are likely to keep USA oil production on increasing trend", ING said.

In other trading, April gasoline fell 0.5% to $1.894 a gallon, while April heating oil fell 1.2% to $1.865 a gallon. The most bullish scenario will be a weaker U.S. Dollar and higher equity prices.