Crude Prices Pare Losses on Rig Drop

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Crude Prices Pare Losses on Rig Drop

Oil prices pared losses to end mostly unchanged on Friday after data showed that the number of active US rigs had fallen this week after rising for the last two weeks

Light sweet crude for August delivery slipped 2 cents to end at $50.89 a barrel on the New York Mercantile Exchange. Based on the most active contracts, this is the lowest these prices have been in more than three months.

Brent for September settlement, the new front month contract, added 18 cents or 0.3% to end at $57.10 a barrel on the ICE Futures Exchange in London.

“But in recent weeks, fundamental pressures such as the announcement of the Iranian nuclear agreement and U.S. weekly inventory reports have weighed on oil prices,” Tim Evans, an energy futures specialist at Citi Futures, told Market Watch a note.

Data from oilfield services provider Baker Hughes on Friday showed that the number of active oil rigs in the US fell by seven last week.

The oilrig number had fallen to multiyear lows late last month before growing for two consecutive weeks and weighing down on crude prices.

The rig count fall has, however, not affected the production levels much and still remains at multi-decade highs.

Crude prices opened mostly lower on Friday on concerns about increased production with services provider reportedly telling traders and clients that inventories at Cushing, Okla., an important delivery and storage point for the benchmark Nymex contract, had grown by I million barrels between July 10 and 14.

According to data from the Energy Information administration, the stockpiles at Cushing were more than 5 million barrels of their April peaks.

“With the Iran deal, people are aware there is more supply coming so all impetus for a price correction higher has gone,” Hans van Cleef, senior energy economist at ABN Amro in Amsterdam., told CNBC.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com