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US Rig Count Slows Oil Prices but They Remain Near 3-Year High

April 30, 2018 at 13:08 by Matt Jackson

Oil prices pulled back on Monday, following news that the number of rigs in the USA has continued to climb. However, despite the slide, prices remain near their 3-year high, thanks primarily to continued geopolitical concerns. The likelihood that President Trump will reimpose sanctions against Iran has seen oil hit the $75 mark, while Saudi Arabia’s desire to reach higher prices means that the market remains concerned about the potential for OPEC countries to continue to withhold supply of the commodity.

Oil producers added five oil rigs, meaning there is a total of 825 operational US rigs. This is the highest level since March 2015, and it is no coincidence that this has matched rising oil prices. Increased price means producers have greater incentive to extract oil, and shale oil is booming with no sign of slowing.

Brent prices have seen significant gains over the past month, up more than 5%, buoyed by threats of the USA imposing sanctions against Iran once more, as well as the continued battle between Trump and Russia. Geopolitical concerns have weighed heavily on investors, who have been snapping up barrels of oil at what they believe will prove to be bargain prices.

The political situation in Venezuela has continued to worsen, too, which has undoubtedly helped push prices up.

Saudi Arabia, OPEC’s largest oil producing member, has previously stated that they desire a price of $80 to $100 per barrel. The comment drew criticism from Trump but has been treated as a clear sign that OPEC will agree to continue withholding supply of oil through 2019.

WTI oil has slipped 0.87% to $67.51 per barrel, while Brent crude has fallen 0.68% to $73.29 per barrel.

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