OIL PRICE: ABOVE $63 YET
REUTERS, BLOOMBERG - Oil trading was cautious on Monday amid ongoing tensions in the Middle East and after a rising rig count in the United States suggested producers there are preparing to increase output.
Brent crude futures LCOc1 were at $63.55 per barrel at 0614 GMT, up 3 cents from their last close. U.S. West Texas Intermediate (WTI) crude CLc1 was at $56.79 per barrel, up 5 cents.
Traders said crude prices were generally well supported as ongoing output cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia have contributed to a significant reduction in excess supplies that have been dogging markets since 2014.
"The excess of OECD oil inventories over their five-year average levels has fallen by more than 50 percent in 2017, with inventories currently at around 160 million barrels. If current trends continue, inventories are likely to return to the five-year average at some stage in 2018," consultancy Timera Energy said on Monday, adding that strong demand had also helped reduce the glut.
On the supply side, tensions in the Middle East raised the prospects of disruptions, traders said.
Bahrain said over the weekend that an explosion which caused a fire at its main oil pipeline on Friday was caused by sabotage, linking the attack to Iran, which denied any role in the incident.
Despite the Middle East tensions and OPEC-led supply cuts, traders were cautious in betting on further price rises, not least because of an increase in U.S. drilling for new production.
U.S. drillers added nine oil rigs in the week to Nov. 10, the biggest jump since June, bringing the total count up to 738, Baker Hughes energy services firm said on Friday.
The rig count is also much higher than a year ago when only 452 rigs were active, indicating that the U.S. oil industry is comfortable operating at current prices.
U.S. oil producers have raised output by more than 14 percent since mid-2016 to a record 9.62 million barrels per day.
This led to a slide in crude futures prices late on Friday away from over two-year highs reached early last week.
Some analysts warned that both WTI and Brent crude futures looked overbought following strong price rises in late October and early November, raising the risks of a downward correction.
"From a technical perspective, both contracts' Relative Strength Indexes (RSI) are still in severely overbought territory, signaling that a potentially aggressive short-term downward correction is still a genuine possibility," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
Brent hit its highest level since 2015 in November, pushing the RSI above 70 points, which implies an overbought market.
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BLOOMBERG - As Saudi Arabia led OPEC’s output cuts this year to shrink a global glut, it’s lost out on market share in the world’s biggest energy consumer. Russia in September retained the top Chinese supplier spot for the seventh straight month, while the kingdom was third.
PLATTS - The quality of Russia's key Urals crude exports towards Europe will continue to fall next year as more of the country's low-sulfur oil flows are diverted eastward to China, Russian national oil pipeline operator Transneft warned.
FT - OCI — the world’s third-largest polysilicon maker by capacity and South Korea’s biggest — this month reported a 3,373 per cent increase in operating profit to Won78.7bn ($72m) for the July-September quarter, its best performance in five years. Rival Hanwha Chemical saw third-quarter net profit jump 25 per cent to a record Won252bn.
U.S. Rig Count is up 330 rigs from last year's count of 593, with oil rigs up 273, gas rigs up 58, and miscellaneous rigs down 1 to 0. Canada Rig Count is up 41 rigs from last year's count of 174, with oil rigs up 13, gas rigs up 30, and miscellaneous rigs down 2 to 2.