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Crude Oil Falls Despite Decline of US Oil Rig Count

January 10, 2020 at 20:31 by Vladimir Vyun

Futures for crude oil continued to decline today despite the fall of the US oil rig count. According to the report released by Baker Hughes during the US trading session, US drillers reduced the number of oil rigs by 11 to 659 this week. It was the third consecutive weekly decline. The number of gas rigs fell by 4 to 119.

Yet the news did not stop oil prices from declining further. The major reason for that were the easing tensions in the Middle East. At the start of the week, risk aversion surged due to an Iranian attack on US military bases in response to a US drone killing a top Iranian military leader last week. But as both the United States and Iran signaled that they want to avoid a full-blown war and with no new military actions reported, risk premium was starting to dissipate, leaving crude oil without support.

Prices for crude were also under pressure from concerns about rising supply from the United States. Earlier this week, the Energy Information Administration reported that US crude oil inventories rose by 1.2 million barrels to 431.1 million barrels last week instead of falling by 3.4 million barrels as analysts had predicted. Total motor gasoline inventories swelled by 9.1 million barrels.

Futures for delivery of WTI crude oil in February dropped by $0.55 (0.92%) to $59.01 per barrel as of 20:20 GMT on NYMEX today. The most active contract for the North American grade fell about 6.4% over the week — the steepest decline since July. Brent crude for delivery in March dropped by $0.44 (0.67%) to $64.93 per barrel on ICE. February natural gas climbed by $0.04 (1.71%) to $2.2 per million British thermal units on NYMEX.

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