Oil Prices Rise on US Drilling Activity, Russia’s Output Weighs

Oil prices rose on Monday, buoyed by a decline in the United States’ oil production and heightened tensions between US and Iran. As a result, this could lead to a re-imposition of sanctions on Tehran that would obstruct oil exports.

The US West Texas Intermediate (WTI) crude futures were up at $0.26 or 0.4 percent to trade at $65.20 per barrel. In addition, Brent crude futures rose up $0.44 or 0.6 percent to $69.78 per barrel. Finally, the Shanghai September crude futures rose at $66.39 per barrel, up by 1.1 percent.

The head of trading at OANDA in Singapore said that oil markets remained nervous about ‘whether or not the US administration will scrap or maintain the fragile nuclear deal with Iran’. He added that the prices were also supported by last week's report showing the first decline in US drilling activity in three weeks.

Baker Hughes, an energy services firm, reported on Thursday that US drillers cut seven oil rigs, bringing the total count down to 797. This report eased concerns that the booming US shale oil production could potentially derail efforts by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, which started in 2017 in order to end a supply glut and prop up prices.

OPEC, along with some non-OPEC members lead by Russia, has restrained production by 1.8 million barrels per day (bpd) to sustain market equilibrium.

The International Energy Agency (IEA) predicted global oil demand would pick up this year as supply is growing at faster paces that will further boost inventories.

RELATED: Oil Prices Rise amid Middle East Tensions

Russian Oil Output Hits 11-Month High

Energy Ministry Data (EMD) showed on Monday that Russian oil output rose to 10.97 million bpd in March, up from 10.95 million bpd in February. In tonnes, the output was 46.39 million in March compared to 41.836 million in February.  This puts Russia ahead of the US as the world’s biggest crude producer.  This has been the first increase in Russian output since December and the highest since output of 11 million bpd in April 2017. 

The EMD statistics also show Russia’s two largest oil companies Rosneft and Lukoil

 both increased their output by 0.1 percent last month compared with that of February.

Russian oil pipeline exports in March stood at 4.163 bpd, up from 4.162 million bpd in February.

In an agreement with OPEC, Moscow pledged to cut output by 300,000 bpd from a baseline of 11.247 million bpd based on its output in October 2016. The current deal lasts until the end of 2018.

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