Crude oil prices rose by more than 1% on Friday, climbing above the five-month low, around which they traded in previous sessions after Washington’s threats to impose duties on all imports from Mexico. In addition, there are indications that OPEC+ group can extend production constraints.
The futures on US crude oil WTI rose by 1.18% to 53.21 USD per barrel, while Brent is trading 1.23% higher to 62.48 USD per barrel.
Brent and WTI reached their lowest levels since mid-January of 59.45 USD per barrel and 50.60 USD per barrel after US production reached a record high and stockpiles climbed to its highest level since July 2017. This sent the two most traded oil varieties to the bearish territory as they lost more than 20% of its peaks reached at the end of April.
On Thursday, however, the crude oil prices were backed by the news that the United States could postpone duties to Mexico while negotiations between the two countries continue.
Despite the gains of the past two days, Brent is about to send its third negative week with a drop of just over 3%. In WTI, the weekly decrease is about 0.4%.
However, oil market moods are generally not very optimistic as signs of a slowdown in the global economy are on the rise, and the US-China trade war is booming. Moreover, last weeks the US President Donald Trump opened a new front of his trade wars – against Mexico. All these tensions can negatively affect the global GDP by 0.8% in the next year, which will lead to lower fuel demand and prices.
The prices of crude oil are also supported by the supply constraints on the part of the Organization of Petroleum Exporting Countries along with other non-cartel producers, including Russia. Supply is also limited by US sanctions against Iran and Venezuela.
President Vladimir Putin said on Thursday that Russia had differences with OPEC on what is the fair price of crude oil, but a joint decision on production policy would be taken.
Crude oil production in the US rose to a record 12.4 million barrels per day in the week ending May 31, according to the data of the Energy Information Agency. This is an increase of 1.63 million barrels per day compared to May 2018.
Crude oil reserves in the US also rose by 6.8 million barrels in the last week of May to 483.26 million barrels, the highest value since July 2017.
Meanwhile, Ryds Energy raised its forecast for crude oil production in the US by 200,000 barrels per day to 13.4 million barrels by December 2019.
US oil rig count
The US oil and natural gas rig count fell by 12 week-on-week to 1,049, according to the data of the S&P Global Platts Analytics, amid continued slippage in crude prices into the low 50s USD per barrel and worries over global demand.
The decrease leaves the domestic rig count at its lowest level since the week ended January 3, 2018, when totals were at 1,023.
The oil rigs fell by 8 to 841 for the week that ended Wednesday, while gas rigs fell by 5 to 205.
The US oil and gas rig count hit a recent peak of 1,233 in mid-November 2018 when oil prices were on their way down after an early October peak over 76 USD per barrel. Prices later dropped into the 40 USD per barrel in December and hit a recent low of 42.53 USD per barrel on December 24 before drifting up.