Oil holds gain above US$46 as demand seen helping drain stockpiles

Oil holds gain above US$46 as demand seen helping drain stockpiles

Oil holds gain above US$46 as demand seen helping drain stockpiles

Oil prices firmed on Monday, supported by a slowdown in new rigs looking for crude and a perception of strong demand. Stockpiles will drop at a faster pace worldwide this half of the year as demand rises and OPEC members comply better with an output-cut agreement, according to Haitham al-Ghais, Kuwait's governor to the group. However, the slower pace of additions, as well as a much larger-than-expected decline in USA crude stocks reported by the Energy Information Administration last week of 7.6 million barrels, suggests the torrid pace of American production could be easing.

While oil advanced last week, prices in NY are still below US$50 a barrel on concerns expanded global supplies will offset output curbs by the Organization of Petroleum Exporting Countries and its allies as part of a deal to help rebalance the market.

"There's an expectation demand will pick up on seasonal factors in the third quarter", Kim Yumi, a market strategist at Kiwoom Securities Co., said by phone in Seoul. "However, we may see bigger risks on the supply side, especially from rising U.S. production and stockpiles, once seasonal demand wanes in the fourth quarter".

US West Texas Intermediate (WTI) crude futures were at $46.70 per barrel, up 16 cents, or 0.34 per cent.

Brent crude futures, the global benchmark for oil prices, were at $49.08 per barrel at 0126 GMT, up 17 cents, or 0.35 per cent, from their last close. Prices gained US$2.31 to US$46.54 a barrel last week. Prices climbed 4.7% last week.

The number of active oil rigs in the United States rose to 765, according to Baker Hughes data reported at the weekend. The charts indicate a potential drive to at least $49.01 for WTI crude by the end of the week if we continue the bullish pace.

Global oil prices rose to the highest level in almost two weeks after better-than-expected economic data from China boosted demand speculation amid signs that the pace of USA production may be slowing. Rig additions over the past four weeks averaged five, the lowest since November 2016.