Crude Oil Prices Rebound as U.S Drilling Slows
Oil prices gained slightly in the commodities market after falling sharply at the end of last week amid a broader risk-on sentiment.
The booming geopolitical concerns have raised supply risk, while lower imports in China support bearish demand expectations. US drilling activities slowed while the World Bank predicts supply glut will drag prices lower in 2024 and 2025.
ICE Brent was trading above US$71 per barrel while US WTI held above US$67 per barrel; in the early trading session today. However, the persistent worries over the clouded demand outlook in China and ample global supply outlook for next year continue to restrict any major price gains.
The international oil benchmark of Brent crude rose 0.18% to $70.98 per barrel. The US benchmark West Texas Intermediate also increased by 0.3% to $66.98 per barrel, compared to $66.78 at the prior session’s close.
Recent comments from OilChem indicate that China’s previous decisions to cut tax rebates on overseas fuel shipments had a marginal impact, as shipments are more dependent on the allocation of export quotas, said ING commodities strategists.
Analysts noted that the tax rebate was lowered earlier in 2018 and 2016, however refined oil exports increased both years. Last Friday, China cut the tax rebate rate for refined oil products, including gasoline, diesel, and jet kerosene, to 9% from 13%, which will be applicable from 1 December.
Meanwhile, drilling activity in the US slowed over the last week. The latest rig data from Baker Hughes shows that the number of active US oil rigs fell by one over the week to 478, after remaining stable in the preceding week.
This is the lowest level since the week ending on 19 July 2024. The total rig count (oil and gas combined) stood at 584 over the reporting week, slightly down from 585 a week earlier and 5% lower compared to the same time last year.
The latest positioning data shows that a fair amount of speculative selling in ICE Brent occurred over the last week. Elsewhere, conflict between Russia and Ukraine lent upward support to oil prices by fueling market players’ supply fears as both countries continue to target critical energy infrastructures.
Russia carried out massive airstrikes across multiple Ukrainian regions, including the capital Kyiv, overnight and into Sunday morning, causing significant damage to energy infrastructure
Russia used ‘various types of drones, including Shaheds, as well as cruise, ballistic, and aeroballistic missiles—Zircons, Iskanders, and Kinzhals,” Ukrainian President Volodymyr Zelenskyy said on X.
Russia launched about 120 missiles and 90 drones overnight, Zelenskyy said, adding that Ukraine’s air defenses destroyed over 140 of them, all aimed at the country’s energy infrastructure.
Zelenskyy acknowledged that some facilities have been damaged by direct hits and falling debris and that some areas are still without power. However, concerned departments are working to handle the situation. #Crude Oil Prices Rebound as U.S Drilling Slows Naira Depreciates Ahead of 2-Week Automated FX Trading Trial
