MARKET WATCH: NYMEX crude oil prices drop on rising rig count

Both US and Brent benchmark oil futures eased on Jan. 27 upon a jump in the weekly US rig count. Light, sweet crude oil continued to edge lower in early Jan. 30 trading, which analysts still attributed to the rig count.

Baker Hughes Inc. said the US drilling rig count increased by 18 to 712 active units for the week ended Jan. 27 (OGJ Online, Jan. 27, 2017).

“We saw a pickup in the rig count and we see a pickup in oil production levels,” said Hans van Cleef, ABN Amro analyst. “That of course caps the upside in oil prices.”

Olivier Jakob, Petromatrix analysts, noted the “US rig count had a much larger increase than expected.”

A Wall Street Journal survey of 15 investment banks forecast Brent crude oil will average $56/bbl for 2017. The banks expect light, sweet crude oil will average $55/bbl, the WSJ reported.

Analysts say production cuts by the Organization of Petroleum Exporting Countries and other major producers will help rebalance oil supply and demand, boosting crude oil prices. But rising US oil production and slowing demand growth worldwide could slow the market rebalancing.

Energy prices

The crude oil contract for March delivery on the New York Mercantile Exchange declined 61¢ on Jan. 27 to $53.17/bbl.

US natural gas futures for February delivery gained less than a penny to a rounded $3.39/MMbtu.

Heating oil for February decreased 2¢ to a rounded $1.62/gal. Reformulated gasoline stock for oxygenate blending for February fell 1.5¢ to a rounded $1.53/gal.

The Brent crude contract for March on London’s ICE dropped 72¢ to $55.52/bbl. Gas oil for February closed Jan. 27 at $485.25/tonne, down $8.75.

The average price for OPEC’s basket of benchmark crudes on Jan. 27 was $52.88/bbl, down 37¢.

Contact Paula Dittrick at paulad@ogjonline.com.