U.S. Rig Count Falling, International Tensions Rising In Oil Market
Crude oil prices are trading higher on Friday as international geopolitical tensions rise and U.S. rig counts fall for the seventh consecutive week. Here’s a breakdown of what you need to know.
This week’s Baker Hughes report indicated that U.S. energy companies shut down 10 additional rigs this week, lowering the total number of active rigs to only 595.
The last time the United States had less than 600 active rigs was July 2010.
In the seven consecutive weeks of reductions, U.S. companies have cut a total of 80 rigs. U.S. rig count reached its all-time peak at 1,609 just about one year ago.
A pair of international developing stories also have global oil investors’ collective attention. Both the United States and Russia continue to fly combat missions in Syria, and Turkey reportedly shot down a drone in Syrian airspace on Friday.
U.S. officials believe the drone was of Russian origin, but the Russian defense ministry says all of its drones are accounted for.
U.S. Ambassador to the United Nations Samantha Power called Iran’s recent missile tests “a clear violation of U.N. Security Council Resolution 1929.” The already oversupplied global oil market has been bracing for an influx of Iranian oil ever since a nuclear deal was reached only weeks ago.
A Morgan Stanley poll found investors predict an increase of at least 500kb/d to global crude oil supply by the end of 2016 as a result of the nuclear deal. There is no indication whether Iran’s recent actions put the terms of the nuclear deal in jeopardy.
Oil trading this week was understandably choppy. Shares of the United States Oil Fund LP (ETF) (NYSE: USO) are down more than 5.1 percent on the week, but are up slightly on Friday in mid-day trading.
Disclosure: The author holds no position in the stocks mentioned.
Image Credit: Public Domain
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.