Oil rises on IEA’s U.S. shale outlook and rig data

Oil prices recovered on Monday following steep losses in the previous session, supported by a fall the USA rig count, but analysts said general oversupply was keeping the market weak.

Worldwide benchmark Brent crude futures LCOc1 were up $1.05, or 3.2 percent, at $34.06 a barrel at 1134 GMT, while USA crude futures CLc1 broke through the $30-a-barrel mark, trading up $1.01, or 3.4 percent, at $30.65 a barrel.

“The U.S. oil rig count continued to decline…, with a total of 26 rigs idled”, Goldman Sachs said.

The International Energy Agency (IEA) said in its medium-term outlook on Monday that US shale oil production was expected to fall by 600,000 barrels per day (bpd) this year and another 200,000 bpd in 2017.

Crisis-hit Venezuela, which mainly relies on oil revenue and is facing recession, is sending new proposals to leaders of OPEC and non-OPEC countries to stabilize the oil market, President Nicolas Maduro has said.

Record U.S. crude stocks of 504.1 million barrels pulled back gains from last week’s relief rally on the announcement of a production freeze by Russian Federation and the Organization of the Petroleum Exporting Countries (OPEC).

“China demand looks particularly challenged with several negative trends of late”, it added.

According to an oil trader, the stocks of crude in the United States are still at record high levels along with near record production which keeps oil much above the everyday demand.

“We expect drops in USA production to be the source of bullishness”, Singapore-based brokerage Phillip Futures said.

OPEC-member Iran has shown little interest in restraining production as it was only allowed a full return to oil markets in January following years of sanctions.

Mohsen Ghamsari, director of International Affairs of National Iranian Oil Company (NIOC) said February 20 that Tehran has increased oil exports by 400,000 barrels per day at the first month following the removal of international sanctions against Tehran. Countries publicly supporting the deal export about three-quarters of the world’s crude, so it “would be a positive signal” for the market, Novak said.

Russian Federation and OPEC were both pumping oil at near-record volumes last month, with Russian Federation reaching another post-Soviet high of 10.88 million barrels per day (bpd).