Oil prices rose on Thursday as crude stayed in sync with Wall Street. Investors continue to weigh concerns about rising US crude stocks against effective OPEC supply cuts. Statoil photo.
Oil prices are up about 4 per cent since January
On Thursday, oil prices rose along side equities markets as investors weighed rising US crude output against successful OPEC supply curbs along with a lower US oil rig count.
By 1:50 p.m. EDT, benchmark Brent crude rose 75 cents to $69.51/barrel and US WTI was up 61 cents to $64.99/barrel. The WTI discount to Brent is over $5, the largest since January and is making Brent less attractive to buyers against US crude.
The Canadian Crude Index increased by 72 cents to $44.48.
Oil prices have risen about 4 per cent since January and are on track for the longest stretch of quarterly gains since late 2010.
“The equities market is rallying and that’s lending support to oil,” Philip Streible, senior market strategist at RJO Futures told Reuters. The three major US stock indexes were showed gains on Thursday.
Also supporting oil prices is the US dollar which is “slightly in positive territory, but it’s not screaming like yesterday,” said Streible.
On Wednesday, the US dollar was up 0.8 per cent and the greenback rose against a basket of currencies by about 0.04 per cent Thursday. A weaker dollar makes oil cheaper for buyers using other currencies.
China is making moves to pay for imported crude in yuan instead of the US dollar by launching the Shanghai crude oil futures contract this week.
OPEC’s supply cut agreement continues to prop up oil prices and the cartel along with Russia say they are looking to extend their agreement beyond its expiry date of December 2018. OPEC will meet in June to discuss prolonging the deal.
Rising US production continues to pressure oil prices. According to the US Energy Information Administration, US crude production hit a record hight of 10.43 million barrels per day (b/d) last week.
As well, the EIA reported that commercial US crude stocks rose by 1.6 million barrels.
“Right now, oil looks fragile,” Petromatrix strategist Olivier Jakob told Reuters.
“The price action last week was pretty clear. The objective on that move was to take out the highs of 2018, but that has not been done and the price action of the last three days has not been very convincing.”
According to Baker Hughes, the US oil rig count fell by seven last week to 797, 135 more than this time last year. In Canada, the rig count dropped by 22 to 71, but is 16 higher than the count this week in 2017. Baker Hughes released its rig count data early this week due to the Good Friday holiday.