MW: Oil price climbs after OPEC’s forecast cut, rig-count drop
LONDON (MarketWatch) — Crude-oil futures climbed for a third straight session on Monday, helped by a further drop in rig counts in the U.S. and the Organization of the Petroleum Exporting Countries cutting its forecast for non-OPEC oil supply growth.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in March CLH5, +1.49% jumped $1.18 cents, or 2.3%, to $52.87 a barrel. March Brent crude LCOH5, +0.69% on London’s ICE Futures exchange rose gained 75 cents, or 1.3%, to $58.55 a barrel.
Oil prices have been up for two consecutive weeks, with Nymex West Texas Intermediate crude-oil gaining 7% last week and ICE Brent crude rising by 9%.
The latest data from oil-field-services company Baker Hughes Inc.’ BHI, +0.63% showed the number of rigs drilling for oil in the U.S. fell by 83 in the latest week, the ninth weekly loss in a row, to the lowest level since December 2011.
“The oil rig count has decreased by 342 since the start of the year, which should result in declining U.S. oil production in the second half of the year,” analysts at Commerzbank said in a note.
That view of shrinking oil production was also echoed in the monthly oil report from OPEC, where the group sharply lowered its 2015 estimate for non-OPEC supply growth by 420,000 barrels a day to 850,000 barrels.
“The main factors for the lower growth prediction in 2015 are price expectations, a declining number of active rigs in North America, a decrease in drilling permits in the U.S. and a reduction in the 2015 spending plans of international oil companies,” OPEC said in the report.
OPEC also raised its forecast for demand for its own oil by 400,000 barrels per day to 29.2 million barrels a day in 2015.
However, oil had wobbled earlier on Monday after China’s overall trade data over the weekend was weaker than expected.
While China’s crude-oil imports were strong in January on the commissioning of new refining capacity, it was weaker compared with a year ago — off 0.6% — due to strong imports last January, analyst Ivan Szpakowski at Citi Research said. He said China’s crude-oil imports are expected to slow from 10% in 2014 to 3% in 2015.
Oil market participants remain divided on whether the current rebound in oil prices can be sustained or whether it is just a blip in a downturn. Headlines indicating tighter supply are being closely watched in a tense market, and price volatility is likely to persist.
“We perceive that the oil slump is likely overdone, and the bottom has likely come to pass on oil’s rebound above its $50 a barrel at this juncture,” economist Barnabas Gan at Singapore’s OCBC Bank says.
Nymex reformulated gasoline blendstock for March RBH5, +1.08% — the benchmark gasoline contract — rose 2 cents to $1.58 a gallon, while natural gas for the same month NGH15, +2.99% picked up 8 cents to $2.66 per million British thermal units.
