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Crude oil falls for 2nd day as US oil rig count rises
[SINGAPORE] Crude oil slid for a second session on Monday, falling further from last week's 2016 highs on concerns over a supply glut after the US rig count rose for the first time since December.
US energy firms last week added one oil rig after 12 weeks of cuts, according to data by industry firm Baker Hughes. The addition, coming after oil rigs had fallen by two-thirds over the past year to 2009 lows, showed the fall in crude drilling stabilising after a 50 per cent price rally since February.
US crude fell 40 cents, or 1.0 per cent, to US$39.04 a barrel by 0001 GMT. The market on Friday climbed to US$41.20 a barrel, its highest since early December, before losing ground to settle down nearly 2 per cent at US$39.44.
Over the past two months, prices have rallied after the Organization of the Petroleum Exporting Countries (Opec) floated the idea of a production freeze at January's levels.
Brent crude's front-month contract was down 12 cents at US$41.08. It hit a high of US$42.54 a barrel in the last session. "The rebound in crude oil prices in the last month appears to have stabilised the number of rigs at work in the US shale sector," ANZ said in a note to clients. "After falling for six consecutive months, Baker Hughes data showed US oil rig counts increased by one to 387." Global oversupply in oil had knocked crude prices down from mid-2014 highs above US$100 a barrel to 12-year lows earlier this year, taking Brent to around US$27 and US crude to about US$26.
The combination of declining oil output, smaller crude stockpile builds and surging gasoline consumption in the United States also helped the recovery, although some analysts said the rally had been overdone.
The average price of a gallon of gasoline in the United States gained nearly 25 cents in the past four weeks, according to a survey released on Sunday.
Money managers raised bullish bets on US crude to a five-month high, data showed on Friday.