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Crude Oil Drops After US Drillers Add Rigs, Heads to Weekly Gains

December 20, 2019 at 20:23 by Vladimir Vyun

Futures for crude oil fell today, with the North American grade tumbling more than 1%. Over the week, though, the commodity was still heading to gains due to recent good news that made traders optimistic and bullish on crude.

Baker Hughes reported that the number of US oil rigs increased by 18 this week. It was the first double-digit increase in 8 months and the biggest since February 2018. The total rig count now stands at 685 — the most since early November. The number of natural gas rigs fell by 4 to 125.

The increasing number of oil rigs was one of the contributors to today’s decline of oil. Market analysts also speculated that profit-taking ahead of holidays was another factor dragging crude down.

While crude oil fell on Friday due to the rising oil rig count and the strong US dollar, which was weighing on commodities priced in the greenback, over the longer term things looked bullish for crude. Under the OPEC+ agreement, the OPEC members, led by Saudi Arabia, and their allies, Russia being the most prominent of them, agreed to deeper production cuts starting January. The output can be cut by as much as 2.1 million barrels per day. The news about the United States and China reaching a phase-one trade deal was another reason for traders to optimistic.

There are still factors that can hurt market sentiment. The most notable of them is the threat of US President Donald Trump’s impeachment.

Futures for delivery of WTI crude oil in February tumbled $0.8 (1.31%) to $60.38 per barrel as of 19:53 GMT on NYMEX today. Brent crude dropped by $0.53 (0.8%) to $66.01 on ICE. Futures for delivery of natural gas in January climbed by $0.06 (2.64%) to $2.33 per million British thermal units.

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