SINGAPORE (Reuters) – Oil prices climbed on Monday after U.S. drilling activity fell to its lowest level in about two months, but increasing concerns about weaker growth in major economies kept a lid on gains.
A gas station worker pumps fuel into a motorbike at a gas station of the Venezuelan state-owned oil company PDVSA in Caracas, Venezuela November 2, 2018. REUTERS/Marco Bello
International Brent crude oil futures LCOc1 were at $60.37 per barrel at 0134 GMT, up 9 cents, or 0.2 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $51.44 per barrel, up 24 cents, or 0.5 percent.
“Oil is finding support as the drop in Baker Hughes rig counts points to a near-term slowdown in U.S. production,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
U.S. drillers cut four oil rigs in the week to Dec. 14, pulling the total count to the lowest since mid-October at 873, General Electric Co’s (GE.N) Baker Hughes energy services firm said on Friday.
“This, when combined with (expectations) Saudi Arabia is … to cut exports to the United States to draw down inventory builds (there) should provide a short-term base despite global slowdown fears, which continue to resonate,” Innes said.
The Organization of the Petroleum Exporting Countries and its Russia-led allies have agreed to curb output from January, in a move to be reviewed at a meeting in April. Saudi Arabia is OPEC’s de facto leader.
However, some analysts said that oil markets were expected to remain oversupplied in the near-term as the OPEC-led planned supply cuts would likely help in some rebalancing only by the second-half of next year.
Growing concerns about weakening growth in major economies such as China and Europe also dampened the mood in markets for oil and other asset classes.
Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand, while the country’s industrial output rose the least in nearly three years as the economy continued to lose momentum.
Meanwhile, French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years, while Germany’s private sector expansion slowed to a four-year low in December.”
“The potential for a significant movement in the U.S. dollar clearly has an impact on oil pricing with the Fed meeting (this week). We’re looking outside the oil markets for its next major move,” said Michael McCarthy, chief markets strategist at CMC markets.
The U.S. Federal Open Market Committee (FOMC) is set to start a two-day meeting on Tuesday.
Reporting by Koustav Samanta in Singapore; Editing by Joseph Radford