Oil prices inched up yesterday as Saudi oil minister, Khalid al-Falih, assured that an end to OPEC-led supply cuts was unlikely before June and a report of falling U.S. drilling activity.
Despite this, markets were somewhat held back after U.S. employment data raised concerns that an economic slowdown in Asia and Europe was spilling into the United States, where growth has so far still been healthy.
The U.S. West Texas Intermediate (WTI) crude oil futures were at $56.29 per barrel up 22 cents, or 0.4 per cent from their last close, while Brent crude futures were at $65.91 per barrel, up 17 cents, or 0.3 per cent.
Oil markets have been supported this year by ongoing supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated allies like Russia known as the OPEC+ alliance.
The OPEC+ has pledged to cut 1.2 million barrels per day (bpd) in crude supply since the start of the year to tighten markets and prop up prices.
The group would meet in Vienna on April 17-18, with another gathering scheduled for June 25-26, to discuss supply policy.
Saudi oil minister, Khalid al-Falih told Reuters on Sunday it would be too early to change OPEC+ output policy at the group’s meeting in April.
“We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward,” Falih said.
Prices were also supported by U.S. energy services firm Baker Hughes’ latest weekly report showing the number of rigs drilling for new oil production in the United States fell by nine to 834.
High drilling activity last year resulted in a more than 2 million bpd rise in production , to a record 12.1 million bpd reached this February.
“This is the third straight week of decline after a number of oil producers trimmed their spending outlooks for 2019,” ANZ bank said yesterday.
The slowdown in drilling points to more timid output growth going forward, but because the overall drilling level remains relatively high despite the recent decline, many analysts still expect U.S. crude output to rise above 13 million bpd soon.
Meanwhile, the United Arab Emirates, UAE, has assured it would continue to deliver on crude oil supply cuts under a producer agreement until the global market is re-balanced, Minister of Energy and Industry, Suhail al-Mazrouei said on Sunday.
The OPEC, along with major non-OPEC producers such as Russia have pledged to reduce their oil production to cut into a supply glut.
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