SINGAPORE, July 2 (Reuters) – Oil prices edged up on Thursday, partially recovering from price falls of 2.5 to 4 percent a day earlier as USA stockpiles rose for the first time in months on the back of high production.
The current USA horizontal and vertical rig count across the Permian, Eagle Ford, Bakken and Niobrara shale plays implies that USA oil production growth will reach 135,000 barrels per day year on year” by the fourth quarter of 2015, Goldman Sachs said on Friday. The firm said the number of rigs drilling for oil rose by 12 this week, the first rise since December.
Brent for August settlement gained 6 cents, or 0.1 per cent, to US$62.07 a barrel on the London-based ICE Futures Europe exchange yesterday.
Higher oil prices and a decline in drilling completion costs may spur enough new production to come online to stave off a drop in total supply, Bloomberg Intelligence energy analysts Vincent Piazza and Syarifa Galeb said in a research note Wednesday.
“Cracks”, or refining margins for such products, also rose, pulling along crude prices on expectations on more crude usage as USA summer driving built to a peak.
Brent crude futures were trading at $62.33 per barrel, up 32 cents after dropping 2.5 percent in the previous session.
“The market made a decision to focus on the economy and the old story about the oil glut (in trading on Friday)”, said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.
Proactive Investors Australia delivers insights on global commodity markets, along with the impact on local market sectors.
Last year, US crude prices fell from around $107 in June 2014 to near $42 in March on oversupply concerns as producers in the United States, the Organization of the Petroleum Exporting Countries and elsewhere pulled near record amounts of oil out of the ground despite lackluster world demand. Both sides were grappling for a breakthrough as last-ditch talks dragged into a sixth day Thursday ahead of the Jul 7 deadline. “OPEC members, seeking to defend their market share of a highly oversupplied Crude Oil market, have engaged in a ‘price ware”.
