Oil Up As US Rig Count Falls Again; Prices Still Down On Week

Reuters

NEW YORK, Oct 16 (Reuters) - Oil prices rose nearly 2 percent on Friday as traders covered short positions after four days of sharp losses, and as data showed the U.S. oil rig count fell for a seventh straight week.

U.S. crude and Brent remained on track for steep weekly losses after the International Energy Agency predicted on Tuesday that the global market would remain oversupplied through 2016.

U.S. crude was on track for its biggest weekly decline in 10 weeks, with Brent headed for its steepest in eight weeks.

U.S. crude rose 75 cents to $47.13 per barrel by 1:47 p.m. EDT (1747 GMT). It was down 5 percent on the week.

Brent for December delivery rose 50 cents to $50.23 a barrel, still down 4 percent on the week.

On Monday, prices tumbled as much as 5 percent on concern that record pumping of crude by OPEC producers was adding to a global crude glut.

Prices rose early on short-covering, and buying continued after Baker Hughes Inc reported that the U.S. oil rig count dropped by 10 to 595 this week, the lowest since July 2010.

"People are paying closer attention to the rig count to indicate a drop in U.S. production. Oil rigs down to 595 - that is a primary support," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

But, ultimately, the overall fundamentals of oversupply are bearish, McGillian said. "Until we see a sizeable decline in storage in the U.S. I think the market will struggle to sustain any rally."

On Thursday, the U.S. Energy Information Administration (EIA) said the country's crude inventories rose by 7.6 million barrels last week, more than double the build of 2.9 million barrels expected by analysts in a Reuters poll.

"In light of the large builds in crude oil inventories over the last two weeks and the significant pull-backs in refinery utilization rates, I remain bearish," said David Thompson of Powerhouse, an energy-focused commodities broker in Washington, who expected crude prices to face resistance at $47.74 a barrel and $50.92.

Strong equity markets supported crude prices as Wall Street trended higher after a two-month peak in European share prices.

(Additional reporting by Barani Krishnan and Scott Disavino in New York, Karolin Schaps in London, Meeyoung Cho in Seoul; Editing by Marguerita Choy)

Copyright 2015 Thomson Reuters.

Copyright 2017 Thomson Reuters. Click for Restrictions.

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Brent Crude Oil : $52.42/BBL 2.12%
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