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Monday, July 4, 2022

Crude oil futures rise on oil rig count decline; ICE Brent up at $65.64/b, NYMEX WTI $56.25/b

London — Crude oil futures saw signs of recovery Monday morning in European trading after Friday’s sharp drop, on the back of a mixed bag of falling rig counts in the US and bullish expectations from OPEC cuts and the impact of sanctions.

At 1237 GMT, ICE May Brent crude futures were up 56 cents from Friday’s settle at $65.64/b, while the NYMEX April light sweet crude contract was up 45 cents/b at $56.25/b.

“Oil prices are up slightly as the new week of trading begins after having come under noticeable pressure in late trading on Friday,” Commerzbank analysts said in a morning note, adding that there were bullish factors driving oil, including the expectation that OPEC cuts would leave the oil market “balanced or even marginally under-supplied.”

The market was also gaining support as data released by Baker Hughes Friday showed the US rig count declined by 10 to 843 in the week to Friday, the second consecutive weekly drop, bucking analyst expectations of an increase.

“A number of factors including OPEC delivering on cuts, US sanctions on Iran and Venezuela, Russian oil production starting to tick lower… a lower US oil rig count and progress on the US-China trade negotiations” were all looking bullish for the price, said Bjarne Schieldrop, chief commodities analyst at SEB.

However, other analysts pointed to a more mixed picture amid the US’ continued brisk output, with bullish signals Monday failing to have as robust an impact on prices as might be expected.

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“This strength is anything but convincing,” Tamas Varga, an analyst at PVM, said in a morning note. “We still believe that the risk is skewed to the upside but quick and decisive action is needed from oil bulls to maintain this view.”

This week will bring weekly crude stocks data from the American Petroleum Association on Tuesday followed by data from the US Energy Information Administration on Wednesday, as well as further signals on the outcome of US-China trade negotiations.

— Katherine Dunn, [email protected]

— Edited by Jonathan Fox, [email protected]

Source: S&P Global Platts

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