Oil edges higher to start the week but glut concerns hang over market
Investing.com - Oil prices were higher in North American trade on Monday, albeit off the best levels of the session as concerns over booming shale output growth in the U.S. remained in focus.
The U.S. West Texas Intermediate crude August contract was at $43.30 a barrel by 8:50AM ET (1250GMT), up 29 cents, or around 0.7%. It touched its lowest since August 11 at $42.05 on Wednesday last week.
Elsewhere, Brent oil for September delivery on the ICE Futures Exchange in London tacked on 26 cents to $46.01 a barrel, after hitting $44.35 last Wednesday, a level not seen since November 14.
WTI lost $1.73, or about 3.9%, last week, while Brent fell $1.67, or roughly 3.8%. Both have now posted losses five weeks in a row, which marks the longest weekly losing streak since August 2015.
Crude reached bear-market territory last week amid concern that the ongoing rebound in U.S. shale production is derailing efforts by other major producers to rebalance the market.
U.S. drillers last week added rigs for the 23rd week in a row, according to data from energy services company Baker Hughes, the longest such streak on record.
The U.S. rig count rose by 11 to 758, extending a year-long drilling recovery to the highest level since April 2014, implying that further gains in domestic production are ahead.
The increase in U.S. drilling activity and shale production has mostly offset efforts by OPEC and other producers to cut output in a move to prop up the market.
In May, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018.
So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, and a relentless increase in U.S. shale oil output.
In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.
Meanwhile, traders will also continue to pay close attention to comments from global oil producers for evidence that they are complying with their agreement to reduce output this year.
Elsewhere on Nymex, gasoline futures for August inched up 0.7 cents, or 0.6%, to $1.430 a gallon, while August heating oil gained 1.1 cents to $1.390 a gallon.
Natural gas futures for August delivery rallied 5.5 cents to $3.006 per million British thermal units.
Related Articles
Oil steadies but supply concerns continue to weigh
There are several 'red flags' in the oil market right now
U.S. natural gas futures kick off the week with strong gains
