Crude oil futures were higher during mid-morning trade in Asia Monday, recovering from Friday’s losses, on improved sentiment following a bullish report on US rig count data. At 10:50 am Singapore time (0250 GMT), ICE April Brent crude futures were up 34 cents/b (0.49%) from Friday’s settle at $65.41/b, while the NYMEX April light sweet crude contract moved 32 cents/b (0.57%) higher to $56.12/b.
According to data released by Baker Hughes on Friday, US oil rig data for the week ended March 1 was down for the second consecutive week, declining by 10 to 843. The total active US rig count was also down nine to 1,038, Baker Hughes data showed. Data released last Thursday by S&P Global Platts Analytics expected oil directed rigs to be up 17 to 867 for the week ended February 27, while total active rig counts were expected to have increased by 20 to 1,110 for the same period.
“Oil prices are trading sideways at the moment with fundamentals providing a mixed outlook at the moment,” Phillip Futures’ investment analyst Benjamin Lu said. “Supply side factors are bullish for oil prices, with OPEC producers continuing to reduce output, while the latest data on US oil rig count is also supportive for prices,” he added. “The consolidation for Brent crude oil prices continue, despite last Friday’s drop,” IG’s market strategist Pan Jingyi said.
Russia has achieved half of its pledged oil output cuts under its pact with OPEC two months after the latest production curbs kicked in, according to figures from Russian energy minister Alexander Novak on Friday. “Overall in February, output was down 145,000 b/d on December 2018, and down 97,000 b/d on October 2018. Furthermore, by the end of February, output was around 165,000 b/d below December 2018 and 118,000 b/d below October 2018,” Novak said, according to a ministry statement.
Russia has committed to reducing output by around 230,000 b/d from the October 2018 levels of 11.421 million b/d under the OPEC agreement, set to be in force for the first six months of 2019. It is planning to reach this target by April.
“On the demand side of things, however, economic indicators from US and China is bullish, ” Lu said. China’s February Manufacturing Purchasing Index, released Thursday, dipped 0.3 points to 49.2, marking a third straight month of declining factory activity, wile a report released last Friday by the the Institute of Supply Management showed that US manufacturing activity expanded at a slower rate in February. The group’s closely watched manufacturing index fell to 54.2% in February, a 2.4 percentage point drop from 56.6% in January.
“Investors focused on the weak US economic data, which may portend slower demand for crude,” analysts from UOB Bank said in a note.