Oil prices up over 3 per cent
Oil prices rose over 3 per cent in trading Friday on Wall Street gains and a decline in the US dollar, despite investors concerns about the global crude glut.
By 1:23 p.m. EDT, Brent crude was at $52.61/barrel, up $1.58 and US WTI rose by $1.34 to $48.43/barrel.
“It’s following the equity markets, and impacted by the dollar,” said Tariq Zahir, founding member at Tyche Capital Advisors told Reuters. He added that fundamentals for oil remain bearish as summer comes to a close and US driving season nears an end.
Both Brent and US WTI are on track to close the week lower, however, after earlier losses due to data showing weaker demand in China and increased US production.
“The main question is whether we will continue to see the kind of inventory draws that may show the supply-demand balance is tightening over the next few weeks,” Gene McGillian, director of market research at Tradition Energy told Reuters in an interview.
According to loading programmes, Nigeria’s crude exports are expected to fall by 1.72 million barrels per day (b/d) in October and there are some signs that the US crude inventories are beginning to tighten.
In its weekly rig count report, Baker Hughes reports the US rig count is down by three to 946, and the Canadian rig count is down by six to 214.
At this time last year, there were 491 operational rigs in the US and 121 in Canada.
The US Energy Information Administration reports production in the US has risen to 9.5 million b/d while commercial crude inventories have fallen 13 per cent from March highs and now sit below 2016 levels.
Global bank Citi believes growing US shale output and an improved outlook for projects in nations such as Mexico, Guyana, Brazil and Canada can keep the market balanced and prices capped around $60 through 2022.
“This is contrary to the conventional wisdom forming and espoused by the likes of the IEA to the Saudis and the Russians among others, who warn that a supply gap is emerging imminently, perhaps by the end of the decade,” Citi analysts wrote, according to CNBC.
