Oil prices fall on supply worries

Drillers in most of the USA removed 9 oil rigs in the week ended October. 9, sending the total rig number down to 605, oil firm Baker Hughes Inc (NYSE: BHI) disclosed, Friday.

The number was the lowest noted since July, 2010. In the past five weeks the U.S drillers have shut nearly sixty one rigs.

Since it reached an all-time peak of 1,609 for the week a year ago, rig count reductions for the week averaged 20. Internationally traded Brent futures LCOc1 were up 43 cents at $53.08 a barrel.

“Another fall in the United States oil rig count helped support WTI price (but) the focus will be on the release of China’s trade data, which will indicate whether low prices have kept import demand high”, ANZ said bank.

But Goldman Sachs added that a fast drawdown of the noticed backlog of unfinished rigs could pave the way to bigger output later in the year and next year.

Oil prices had gotten a lift early in the day from a report by the Organization of the Petroleum Exporting Countries that pointed to deeper cuts in non-OPEC oil output and said factors that have depressed crude prices are “starting to show signs of alleviation”.

To Andrew Cosgrove of Bloomberg Intelligence, the current oil price rebound is technical, due partly to short covering and is headline driven; the oversupply situation is likely to last through 2016 and oil price is likely to trade at US$40-US$60 per barrel.

The dollar hovered near a three-week low versus a basket of major currencies, anchored by doubts the US Federal Reserve will raise interest rates by year-end.

Global oil prices fell today, reversing earlier gains, as a few traders took profits and continued to fret over the stubborn global supply glut. Oil prices are resuming their upward trend as the new week of trading gets underway, boosted among other things by USA drilling activity data published on Friday evening by oil service provider Baker Hughes.