Brent, WTI Prices Dip as US Rig Count Increases

Oil prices dipped on Monday as a rising US rig count implied further increases in output, marking one of the few factors tamping back crude in an otherwise bullish environment.

Brent crude futures were at $73.91 per barrel, down 15 cents, or 0.2% from their last close. US West Texas Intermediate crude futures were down 18 cents, or 0.3%, at $68.22 a barrel, CNBC reported.

“We expect oil prices to recede slightly today as market anticipates on the prospect of rising production in the US,” Singapore-based Phillip Futures said on Monday.

US drillers added five rigs drilling for new production in the week ended April 20, bringing the total to 820, the highest since March 2015, according to Baker Hughes energy services firm.

The rising rig numbers point to further increases in US crude production, which is already up by a quarter since mid-2016 to a record 10.54 million barrels per day.

Only Russia produces more, at almost 11 million bpd.

Despite slipping on Monday, overall the oil market remains well supported, especially by strong demand in Asia.

Brent is up by 20% from its 2018 low in February.

Prices are also being supported by supply cuts led by the Organization of Petroleum Exporting Countries, which were introduced in 2017 to prop up the market.

“Added price pressure comes from US sanctions against the key oil exporting nations of Venezuela and Russia,” said J.P. Morgan Asset Management Global Market Strategist Kerry Craig.

He was referring to action the US government has taken on Russian companies and individuals, as well as on potential new measures against struggling Venezuela.

“Stay long oil,” J.P. Morgan said in a separate note.

The United States has until May 12 to decide whether it will leave the Iran nuclear deal and instead impose new sanctions against Tehran.

The generally elevated oil prices have also sparked a spat between US President Donald Trump and OPEC.

Trump on Friday accused OPEC of “artificially” boosting oil prices, threatening on Twitter that this “will not be accepted”, drawing rebukes from several of the world’s top oil exporters within OPEC.