Fall in operating rig numbers




The weakness in US oil drilling continued last week with another fall in operating oil rig numbers.

Data from Baker Hughes, the oil services group, said active oil rig numbers fell by three to 496, but gas rigs in use rose by one to 103.

A year earlier, the US had 586 oil rigs, 141 gas rigs, and four miscellaneous rigs in operation.

Overall, 603 rigs were operating in the US last week, down from 731 a year earlier. West Texas Intermediate crude oil fell 1.1% to $78.34 per barrel, while Brent slid 1.2%.

The Energy Information Administration's report on Wednesday showed a surprise 1.4 million barrel fall in crude stocks last week, which went against expectations for another rise in stocks.

West Texas Intermediate (WTI) crude oil closed lower Friday, giving up early gains that came on signs of improving demand from China as the prospect of US interest-rate cuts diminished.

WTI crude oil for June delivery closed down $1.00 to settle at $78.26 per barrel after falling off the day's high of $79.96, while July Brent crude, the global benchmark, lost nearly $1 to $82.98. WTI rose 0.27% for the week while Brent was unchanged from the previous Friday.

OPEC+ will stage a ministerial meeting on June 1 to decide whether to extend into the summer 2.2 million barrels per day of voluntary production cuts that are set to expire at the end of the quarter. An extension would squeeze inventories and keep prices high during the high-demand summer season.

Iraq said at the weekend it will not agree to any plan to further cut production from OPEC.

Geopolitical risk continues to support prices, though Israel's war on Hamas has yet to affect production or exports from Persian Gulf countries. Israel continues to face pressure to refrain from plans to attack the crowded city of Rafah in southern Gaza, with the US delaying shipments of some bomb types and artillery in a bid to prevent further civilian casualties. However, Israeli Prime Minister Benjamin Netanyahu said the offensive will continue.


Name Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.