The Wall Street Journal, London, 7 August
Oil prices were under pressure on Friday ahead of U.S. industry data as the near-term outlook for crude remained bearish.
Traders are awaiting the monthly U.S. jobs report later in the day for its impact on the dollar, which affects commodity prices. The market is also anticipating the latest U.S. rig-count data as the oil glut, which has battered prices since last year, shows little signs of abating.
“ ‘Squeeze out as much as possible to cash in on quantity’ seems to be a credo commonly used amongst crude producers these days,” said analysts at JBC Energy. “Record level output can be seen around the globe from all sorts of crude sources and is exacerbating the global oversupply.”
Brent crude oil on London’s ICE Futures Exchange was trading at $49.39 a barrel on Friday, down 0.1% from the previous day’s settlement. Brent fell below the key $50-a-barrel mark earlier in the week, a level not seen since January.
On the New York Mercantile Exchange, West Texas Intermediate futures were trading at $44.76 a barrel, up 0.1% from Thursday’s settlement.
“Prices have recovered slightly this morning, but lack the fundamental support that would be required for any more pronounced and lasting recovery,” said analysts at Commerzbank.
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Later on Friday, Baker Hughes Inc. will publish the latest U.S. oil drilling rig count, a proxy for activity in the industry. The number of rigs has fallen sharply since oil prices fell last year. There are now about 60% fewer rigs working since a peak of 1,609 in October.
The rig count, however, has increased in recent weeks casting doubt on expectations that U.S. oil output will drop off significantly in the low oil-price environment.
“There are good indications that U.S. production is still going strong and that shale producers are actually increasing output beyond targets set earlier,” JBC said.
After a brief rebound in the spring, the mood in the market has turned somber, as many suppliers around the globe continue to pump high volumes of crude oil.
Iran, for instance, has indicated it plans to step up supplies as soon as the international sanctions against it are lifted. Oman, meanwhile, is increasing production to 1 million barrels a day to counterbalance low prices weighing on its budget deficit, JBC said.
Nymex reformulated gasoline blendstock—the benchmark gasoline contract—was little changed at $1.64 a gallon. ICE gasoil changed hands at $475.25 a metric ton, up $7.75 from the previous settlement.