Oil held gains above US$46 a barrel as optimism that demand will help shrink supplies outweighed an increase in US rigs drilling for crude.
Futures were little changed in New York, after rising 5.2 per cent last week. Stockpiles will drop at a faster pace worldwide this half of the year as demand rises and Opec members comply better with an output-cut agreement, according to Haitham Al Ghais, Kuwait’s governor to the group. US drillers targeting crude added two last week, the smallest increase since May.
While oil advanced last week, prices in New York are still below $50 a barrel on concerns expanded global supplies will offset output curbs by Opec and its allies as part of a deal to help rebalance the market. The group’s output climbed last month to the highest this year as members exempt from the deal - Nigeria and Libya - pumped more and others slipped in delivering their pledged curbs.
“There’s an expectation demand will pick up on seasonal factors in the third quarter,” said Kim Yumi, a market strategist at Kiwoom Securities. “However, we may see bigger risks on the supply side, especially from rising US production and stockpiles, once seasonal demand wanes in the fourth quarter.”
West Texas Intermediate for August delivery was at $46.64 a barrel on the New York Mercantile Exchange, up 10 cents, at 12:50pm in Seoul. Total volume traded was about 37 per cent above the 100-day average. Prices gained $2.31 to $46.54 a barrel last week.
Brent for September settlement added 13 cents, or 0.3 per cent, to $49.04 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 4.7 per cent last week. The global benchmark crude traded at a premium of $2.18 to WTI.
The number of active oil rigs in the United States rose to 765, according to Baker Hughes data reported at the weekend. It is the second week of renewed growth after drillers snapped a 23-week stretch of advances at the end of June. Shale explorers have been the driving force behind a surge in US production, more than doubling the rig count from a low of 316 in May 2016.
