Crude oil futures were higher during mid-morning trade in Asia Friday amid an expected draw reported in US oil rig data while signs of continued compliance between OPEC producers and Russia also supported prices. At 10:40 am Singapore time (0240 GMT), April ICE Brent crude futures were up 23 cents/b (0.36%) from Thursday’s settle at $64.80/b, while the NYMEX March light sweet crude contract was up 20 cents/b (0.37%) at $54.61/b
The US oil and natural gas rig count declined by 15 this week to 1,099, marking its lowest level since February 2018, data released Thursday by S&P Global Platts Analytics shows. Oil-directed rigs were down by 21 on the week to 854 as they continued to decline from a multi-year high at 933 in December, Platts Analytics data showed.
The continued slowdown in US drilling activity comes as West Texas Intermediate crude oil prices continue to hover in the low-$50/b area. On Thursday, the prompt-month contract was assessed at $54.41/b, down from an October high at more than $76/b, S&P Global Platts data shows. Official data on this week’s oil and gas rig count data is due for release from Baker Hughes later Friday.
“Fundamental reports on tighter global inventories along with declining global production levels from OPEC-led cuts continues to lay fundamental support for oil prices despite whippy trading conditions from global growth worries, ” Benjamin Lu, investment analyst at Phillip Futures said. Meanwhile, Russian energy minister Alexander Novak on Thursday said that Russia has benefited financially from its output alliance with OPEC, signalling that Moscow remains committed to the deal despite recent criticism from Rosneft CEO Igor Sechin.
Novak’s comments come a week after reports that Russia’s largest crude producer Rosneft is pushing for the country to exit the agreement over concerns it is losing its market share to the US. “The crude oil market shrugged off concerns about the [US-China] trade talks as signs of further reduction from OPEC+ continue to mount, ” ANZ analysts said in a note. “Russian Energy Minister Novak said that the country would accelerate its implementation of the oil production cuts agreed with OPEC, ” they added.
Novak also said that Russian crude output is currently down about 80,000-90,000 b/d from October and about 140,000 b/d from December. “In February, the average cut should be a minimum of 150,000 b/d, but our companies will target accelerating the cut.” Elsewhere, Venezuela’s state-owned PDVSA will have available by March, 370,000 b/d of crude oil for export, that has been left without a home because US sanctions against PDVSA that prevent it from accessing to the US market, according to a technical report seen by Platts Thursday.