US Oil Prices Rebound

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US Oil Prices Rebound

Oil futures rose on Friday as surging markets for diesel and gasoline drove crude higher and traders looked past a drop in US drilling activity, which was lower than expected.

According to Reuters, Brent futures rose 4.2% or $2.53 to $62.58 and US crude rose 3.3% to $49.76 by $1.59 assisted by an improving demand outlook and supply outages.

Oil-field services, Baker Hughes Inc. said that its rig count has dropped 33 this week to 986, dropping below 1,000 the first time from June 2011. Even though the number was lower 31% from a year ago, the weekly drop fell short of the analysts said that it would be necessary to get a substantial effect.

In the recent months, investors have been fixated on the number as an indication of the eventual supply cuts, though analysts caution a reduction in the number of the US oil rigs in use, which is currently running at a high of 9.3 million barrels per day.

Oil futures had been positive throughout the session but gave back some gains after the release of the report. The market rallied again in the last half-hour of trading, following prices higher for the refined products as diesel and gasoline. Contracts for both products rallied on Friday.

The Wall Street Journal quoted Phil Flynn, account executive at wholesale brokerage Price Futures Group in Chicago as having said, “It’s expiry madness. Crude oil is basically being supported by those products.”

In a note, Barclays said, “The recent strength in oil prices is likely temporary and hides huge uncertainties with respect to the fundamental balance of the market.”

March gasoline futures climbed 6 cents or 3.5% to settle at $1.7676 per gallon in the Nymex. March diesel futures climbed 16.31 cents or 7.6% to settle $2.2989 per gallon.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com