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Oil holds near nine-week highs on jobs data, fall in U.S. drill rigs

Published 07/08/2017, 04:59
© Reuters. An oil rig drilling a well at sunrise near Midland, Texas
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By Jane Chung

SEOUL (Reuters) - Oil prices edged lower on Monday but still held near nine-week highs, supported by robust U.S. jobs data last week and a slight fall in the U.S. drill rig count, even as rising output from OPEC capped crude markets.

Global benchmark Brent crude futures (LCOc1) were down 6 cents, or 0.11 percent, at $52.36 a barrel at 0309 GMT.

U.S. crude futures (CLc1) were down 7 cents, or 0.14 percent at $49.51 per barrel.

Prices for both benchmarks have been on the rise, holding near their highest since late May, when oil producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended a deal to reduce output by 1.8 million barrels per day (bpd) until the end of next March.

"Crude oil prices rose strongly as investors viewed (U.S. jobs) data as a positive sign for oil demand in the United States ... A small fall in the number of drill rigs operating in the U.S. also supported prices," ANZ bank said in a note.

U.S. employers added an above-forecast 209,000 workers in July and raised wages, the U.S. Labor Department said on Friday in its monthly jobs report.

U.S. drillers cut one oil rig in the week to Aug. 4, bringing the total count down to 765, energy services firm Baker Hughes (N:BHGE) also said on Friday.

Still, the U.S. rig count has been trending upwards since mid-May, and oil production in the United States hit 9.43 million bpd in the week to July 28, the highest level since August 2015.

Michael McCarthy, chief market strategist at CMC Markets, said, supportive news such as big drawdown in U.S. supplies would be needed to push U.S. WTI prices above $50 a barrel.

"This week, weekly data out of the U.S. should be really influential .... if (U.S. daily production) makes further gains given the high prices, I think that would be a catalyst for downside news," McCarthy said.

Meanwhile, OPEC's crude oil exports in July rose to a record high of 26.11 million bpd, most of which came from Nigeria, according to a report by Thomson Reuters Oil Research last week.

Libya, though, one of the OPEC members who has been exempt from the OPEC-led production cuts, was facing a gradual shutdown of its 270,000-bpd Sharara oil field after the closure of a control room.

© Reuters. An oil rig drilling a well at sunrise near Midland, Texas

Officials from a joint OPEC and non-OPEC technical committee are set to meet in Abu Dhabi on Monday and on Tuesday to discuss ways to boost compliance with their supply reduction agreement.

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