US oil prices inch up, but global economic concerns weigh

[SINGAPORE] US oil prices edged up on Monday amid a fall in drilling activity in the United States, but lingering concerns about weaker economic growth in major economies kept a lid on gains.

US West Texas Intermediate (WTI) crude futures were at US$51.35 per barrel at 0010 GMT, up 0.3 per cent, or 15 US cents, from their last settlement.

International Brent crude oil futures had yet to trade.

"Despite the Organisation of the Petroleum Exporting Countries (Opec) and Russia agreeing to reduce oil production by a further 1.2 million barrels per day at the recent Opec meeting, prices have fallen as the market awaits evidence that the cuts will balance the market," ANZ Bank said on Monday.

"Even a fall in the rig count couldn't dispel these concerns."

US drillers cut four oil rigs in the week to Dec 14, pulling the total count to the lowest since mid-October at 873, General Electric's Baker Hughes energy services firm said on Friday.

Opec and its Russia-led allies have agreed to curb output from January by 0.8 million barrels per day (bpd), while non-Opec allies contribute an additional 0.4 million bpd of cuts, in a move to be reviewed at a meeting in April.

"Oil markets have been struggling for direction post-Opec with traders reading between the headlines and watching US inventory numbers to gauge shale output," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

"The more Opec tries to cut supply and drive prices higher the bigger the door opens for US shale producers."

Growing concerns about weakening growth in major economies such as China and Europe also dampened the mood in markets for oil and other asset classes.

Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand, while the country's industrial output rose the least in nearly three years as the economy continued to lose momentum.

Meanwhile, French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years, while Germany's private sector expansion slowed to a four-year low in December.

REUTERS