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U.S. Oil Rig Count Rebounds from Decline
International crude oil futures continued to fall on Friday (November 4), recording losses for six consecutive trading days, as tensions between Saudi Arabia and Iran may lead to another increase in production from the Organization of the Petroleum Exporting Countries (OPEC), while active oil drilling in the United States that week Rising numbers are also putting pressure on oil prices. U.S. WTI crude oil futures prices hit an intraday low of $43.58/barrel, and Brent crude oil futures prices hit an intraday low of $45.09/barrel.As of press time, U.S. WTI crude oil December futures closed down 1.16% at $44.14 per barrel. Brent crude oil futures for January closed down 1.45% at $45.61 per barrel.
At last week's OPEC technical meeting, the grievances between Iran and Saudi Arabia resurfaced after Iran refused to set a production cap below 4 million barrels per day. Saudi Arabia has threatened to increase oil production to 1,100 or even 12 million barrels per day to suppress oil prices and withdraw from the OPEC meeting if Iran refuses to restrict supply. After the news came out, international crude oil prices plummeted. However, OPEC Secretary-General Barkindo later denied Saudi Arabia's threat to increase production at the Vienna meeting and said that Saudi Arabia's contribution at the meeting was very constructive, and the decline in oil prices narrowed slightly.
Sources said that OPEC members and other oil-producing countries are not satisfied with Iran's unwillingness to participate in the production freeze and Iraq's unwillingness to accept the production freeze. If there is no agreement, all oil-producing countries, including Saudi Arabia and Gulf countries, may increase production. . At the same time, it was pointed out that Saudi Arabia and Gulf oil-producing countries did not threaten to increase production, but only stated that they would produce the crude oil output that consumers need. Saudi Arabia said that crude oil production may increase, not that it will increase production.
However, even though OPEC clarified the market's misunderstanding, the decline in oil prices during the day was still gradually expanding. International oil prices have reached the longest consecutive decline cycle since June. From January to June, Brent crude oil prices fell from last year. It has fallen nearly 14% from its mid-October high.
Petromatrix analyst Olivier Jakob said: "Oil prices are facing a strong correction and technical pressure, and have now reached the oversold zone."
On the other hand, the upcoming U.S. election next week has also increased market uncertainty, making investors cautious about various risk assets.
Even if the U.S. election factor is not considered for the time being, traders pointed out that the performance of crude oil fundamentals has become increasingly worse this week, with a significant increase in U.S. crude oil inventories, continued weakness in demand, and whether OPEC and non-OPEC oil-producing countries can finally implement production restrictions. There are major doubts.
In terms of crude oil data, U.S. oil services company Baker Hughes released data on Friday showing that the number of active oil drilling rigs in the United States increased by 9 to 450 in the week ended November 4, 2016, hitting the highest level since February. Increases were recorded in 20 of 23 weeks. However, it is still lower than the 572 seats in the same period last year.
Well-known financial blog Zerohedge commented on the total number of oil rigs in the United States that week, saying that although the total number of oil rigs in the United States in the week to November 4th reached a new high of 450 since February 2016, domestic crude oil production in the United States remained stable at 8.5 million barrels per day. Nearby; after the data was released, the overall reaction of oil prices was not significant, because previous news within the Organization of the Petroleum Exporting Countries (OPEC) had disrupted the oil market.
According to data released by the EIA during the week, U.S. EIA crude oil inventories increased significantly by 14.42 million barrels in the week as of October 28, setting a record high; an increase of 1.5809 million barrels is expected, while the previous value fell by 553,000 barrels.
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