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Crude Oil Gets Support from Falling Oil Rigs Count, Gulf of Mexico Production

July 12, 2019 at 22:54 by Vladimir Vyun

Futures for West Texas Intermediate crude oil were almost flat while Brent crude ended Friday with gains.

The major positive factor for the commodity was the drop in output from the Gulf of Mexico. Companies were shutting down platforms and rigs and evacuating workers due to the threat from Tropical Storm Barry, which is expected to turn into a hurricane by the weekend.

Another positive factor was the oil rig count released by Baker Hughes. US drillers reduced the number of oil rigs by 4 to 784 this week. The number of gas rigs fell by 2 to 172.

As for negative factors, the report from the International Energy Agency was weighing on crude, predicting oversupply on the market, mainly due to an increase of US output. The report said:

The main message of this Report is that in 1H19 oil supply has exceeded demand by 0.9 mb/d. Our latest data show a global surplus in 2Q19 of 0.5 mb/d versus previous expectations of a 0.5 mb/d deficit. This surplus adds to the huge stock builds seen in the second half of 2018 when oil production surged just as demand growth started to falter. Clearly, market tightness is not an issue for the time being and any re-balancing seems to have moved further into the future.

Futures for delivery of WTI crude oil were little changed at $60.21 per barrel on NYMEX today. September contract for Brent crude advanced 0.3% to $66.72 per barrel on ICE.

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