Oil markets firm on rising refinery demand, falling U.S. rig count
Oil markets were firm on Monday and remained near multi-month highs reached late last week as the number of U.S. rigs drilling for new production fell and refineries continued to start up after getting knocked out by Hurricane Harvey, Reuters reported.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $49.89 a barrel at 0232 GMT, unchanged from their settlement last Friday and still close to the more than three-month high of $50.50 briefly reached on Thursday.
Thomson Reuters technical analyst Wang Tao said WTI was poised to break above $50 per barrel.
“U.S. oil is poised to break resistance at $50.43 per barrel, as suggested by an inverted head-and-shoulders, the wave pattern and a Fibonacci projection analysis,” he said.
Brent crude futures LCOc1, the benchmark for oil prices outside the United States, were at $55.67 a barrel, up 5 cents and not far off the almost five-month high of $55.99 on Thursday.
“Demand forecasts from OPEC and IEA... continued to improve sentiment in the market. Refineries are also reporting a much better recovery from the recent hurricanes,” ANZ bank said on Monday.
Oil refineries across the Gulf of Mexico and the Caribbean were restarting after being shut due to hurricanes Harvey and Irma, which battered the region in the past three weeks.
Royal Dutch Shell’s (RDSa.L) Deer Park refinery in Texas was among the latest, beginning its restart on Sunday. The plant can process 325,700 barrels per day.
The refinery restarts are occurring “as signs emerge of stalling growth in the U.S. shale industry. The number of rigs drilling for oil in the U.S. fell sharply last week,” ANZ said.
U.S. energy firms cut seven oil rigs in the week to Sept. 15, bringing the total count down to 749, the fewest since June, energy services company Baker Hughes said on Friday.
Despite these signs of a tightening market, analysts warned that the distortions of the recent hurricanes made it hard to identify more long-lasting supply and demand fundamentals.
“This week’s crude inventories data will almost certainly still show the distortions of Harvey and Irma and significant increases may be looked at by traders as outlier data,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA.
Hedge funds and other money managers cut their bullish bets on U.S. crude futures and options in the week to Sept. 12, the U.S. Commodity Futures Trading Commission reported on Friday.