Tokyo: Oil fell below $53 (Dh194.6) a barrel as America’s rig count rose for the first time this year, signalling further increases in the nation’s burgeoning crude production.
Futures in New York dropped as much as 2.2 per cent after climbing 2.1 per cent over the previous three sessions. The number of rigs targeting oil rose by 10 to 862 last week, Baker Hughes data showed, as rising crude prices buoyed optimism. In Opec member Venezuela, President Nicolas Maduro abandoned his decision to sever diplomatic ties with the US, as he and National Assembly leader Juan Guaido both sought the backing of the country’s armed forces.
Oil has advanced 16 per cent this year as the Organization of Petroleum Exporting Countries and its allies start cutting production to ease concerns over a supply glut. Nevertheless, record American output, rising stockpiles and the continuing US-China trade war have capped gains. Talks between the world’s two biggest economies later this week may provide the catalyst for crude to break through its recent narrow trading range.
“On a less eventful day so far, maybe the rig count matters,” said Jens Pedersen, a senior analyst at Danske Bank A/S. “The big issue here is we are probably range-trading until we get further clarity on whether we will get any news from these trade talks.”
West Texas Intermediate crude for March delivery fell as much as $1.19 on the New York Mercantile Exchange, and was down 99 cents at $52.70 a barrel as of 10.48am London time. The contract rose 56 cents to $53.69 on Friday.
Brent for March settlement dropped $1.06 to $60.58 a barrel on the London-based ICE Futures Europe exchange, and traded at a $7.87 premium to WTI. The global benchmark crude added 55 cents to settle at $61.64 on Friday.
Venezuela’s Maduro on Saturday sought to deflate tensions with the US by retreating from an earlier order to expel all diplomats. A small number of American diplomats in Venezuela will remain, Maduro said in an interview with CNN-Turk, even as he criticised US Secretary of State Michael Pompeo, who urged other nations to “pick a side” between Maduro and his opponents.
Meanwhile, hedge funds are becoming more bullish on oil’s prospects. They boosted wagers on rising Brent crude prices by 17 per cent in the week ended January 22, the biggest increase since August, according to data released Friday by ICE Futures Europe. Short-selling bets have plunged by 36 per cent this month, the biggest three-week decline in about a year.