Mubasher: Oil prices steadied on early Friday, driven by investors putting new hedges in the futures market as they expected the US crude inventories to fall, whereas they abstained from advancing the prospect of rising global production.
US Nymex futures traded at $68.87 per barrel (pb), $0.9 lower than their last close, as Brent crude futures shed $0.5 to $73.40 pb compared to their previous session.
US Nymex is on its way to see an almost flat week after four weekly losses, while global Brent is heading for a fourth weekly decline in five.
It is worth noting that energy services firm Baker Hughes is due to release its data pertaining the US oil rig count later in the day.
Despite the US crude inventories climbed by 3.8 million barrels last week to 408.74 barrels, the stockpiles at Cushing main oil hub in Oklahoma dropped by 1.3 million barrels. Overall US oil stockpiles were below the five-year average of roughly 420 million barrels.
The declining Cushing inventories would lead oil prices to rise, as last week’s build-up seemingly would not last for long, Australia and New Zealand (ANZ) bank said in a note on Friday.
“Hedges [are] thought to be a factor in oil prices being well bid,” Singapore-based futures brokerage OANDA Asia-Pacific trading head Stephen Innes told Thomson Reuters.
However, there also bearish drivers in oil markets, as Russia crude output rose by 150,000 barrels per day (bpd) month-on-month in July, reaching 11.21 million bpd. In addition, Saudi Arabia boosted recently its production to around 11 million bpd, with the US output hovering near the same level.
Gulf oil producers, including Kuwait and the UAE, along with Russia ramped up production to offset the looming shortfall in Iranian crude supplies, once US sanctions against Tehran comes into effect.
Despite Washington has been pushing for ceasing purchases of Iranian oil, a complete shutdown seems unlikely having China, Iran’s largest crude importer, rejected the US request, as reported by Bloomberg News on Friday.
By 7:47 am GMT, US Nymex futures went down 0.33% to $68.73 pb, while Brent crude futures fell 0.39% to $73.16 pb.
