Oil dips on dollar, rig count rise; focus still on OPEC
The dollar .DXY posted its best weekly performance in more than seven months against a basket of currencies, weighing on prices of greenback-denominated commodities, including crude oil. [FRX/]
A closely watched report by oil services provider Baker Hughes, meanwhile, showed U.S. drillers added four rigs in the week to Oct. 14. It was the 16th week in a row that oil drillers had gone without making cuts, indicating more production to come. [RIG/U]
Despite that, oil prices fell just slightly.
Brent LCOc1, the London-traded crude benchmark, settled down 8 cents, or 0.2 percent, at $51.95 a barrel. For the week, it closed flat.
U.S. West Texas Intermediate (WTI) crude ended down 9 cents at $50.35. It rose about 1 percent on the week.
“There’s no big news to drive the market,” said Phil Flynn, analyst at Chicago brokerage Price Futures Group.
He described the oil rig count rise of four as “anti-climatic.” Most analysts have said rigs need to rise by at least 10 in a week to have a sustained bearish impact on prices.
For now, many think that prices could continue rising in the near term on expectations related to output cuts proposed by OPEC.
Oil prices have trended higher since Sept. 27, with Brent gaining about 13 percent and hitting one year highs above $53, after the Organization of the Petroleum Exporting Countries announced its first planned output cut in eight years.
OPEC plans to rein in a global supply glut that forced crude to crash from mid-2014 highs above $100 and has asked other major producers, including Russia, to join in cutting output. [OPEC/M]
“Between now and November, what OPEC will be trying to do is a lot of jawboning to move prices higher and the market is likely to respond,” said Jim Williams at consultancy WTRG Economics in London, Arkansas.
In Thursday’s trade, both Brent and WTI rose, continuing their recent upward momentum, despite the U.S. government reporting the first domestic crude inventory build in six weeks. Market participants had focused then on larger-than-expected drawdowns in diesel, gasoline and other fuel stockpiles reported by the U.S. Energy Information Administration. -Reuters