Oil falls 3 percent as US adds rigs, China weakness rattles market
U.S. energy firms last week increased the number of rigs looking for new oil for the first time since late December to 862, Baker Hughes energy services firm said in its weekly report on Friday.
“The increase in drilling activity in the U.S. as reported by the oil service provider Baker Hughes on Friday evening is generating headwind,” Commerzbank said in a note.
“Clearly the significantly lower prices in the fourth quarter are prompting shale oil producers to exercise restraint. Because prices have risen considerably since the start of the year and there is a high number of drilled but uncompleted wells, drilling activity is likely to recover soon.”
Even with an uncertain outlook for demand and evidence of growing supply, the oil market has benefited this month from another round of production cuts by OPEC and its partners, as well as robust trade in physical barrels of crude led by China.
Investors have added to their bets on a sustained rise in the oil price this month for the first time since September, according to data from the InterContinental Exchange.
But much of the demand outlook hinges on China and whether or not its refiners will continue to import crude at 2018’s breakneck pace.