Markets

Crude prices stage mild rebound in early Asia, rig data eyed

Investing.com -

Investing.com - Crude rebounded slightly in early Asia on Friday after another sharp drop overnight after Saudi Arabia warned that an extension of a coordinated oil output cut beyond June 30 is not guaranteed with investors turning attention to weekly rig count data in the U.S.

On the New York Mercantile Exchange crude futures rose 0.53% to $49.54 a barrel. On London's Intercontinental Exchange, global benchmark Brent for May delivery was last quoted at $52.38 a barrel.

Ahead, investors are awaiting an update after the number of active U.S. rigs drilling for oil rose by 7 in figures reported last week, the seventh weekly increase in a row. That brought the total count to 609, the most since October 2015, showing the sustained strength of a supply response as crude stays above $50 a barrel in a narrow range since the end of November when an output cut pact was announced.

Overnight, Saudi sources reportedly told a meeting of U.S. shale oil firms that an extension of a pact by OPEC and non-OPEC nations to trim almost 1.8 million barrels per day (bpd) from global markets in the first half of the year is not a good assumption to make for drilling plans.

However, the issues and the overall effect of higher production as oil prices held steadily above $50 a barrel had already hit the market this week as Brent and West Texas Intermediate took a more than 5% tumble. Trading volumes on exchanges reach the highest since early December, with over 430,000 contracts in Brent crude for May delivery and more than 911,000 contracts of WTI for delivery in April changing hands.

As well, crude oil inventories in the U.S. rose more than quadruple the forecasts by 8.21 million barrels at the end of last week, the Energy Information Administration (EIA) said on Wednesday, marking nine straight weeks of gains and taking the total to 528.4 million barrels.

The market had forecast a gain of around 2 million barrels. Gasoline stocks however dropped a much sharper than expected 6.6 million barrels, while distillate supplies dropped 2.7 million barrels, also more than seen.

The data offset a report that showed crude imports by China, the world's second largest buyer, rose to the second-highest level on record in February, reaching 8.286 million bpd, up 3.5% from a year ago, according to trade data released on Wednesday, just shy of December's record 8.57 million bpd and up on 8.01 million bpd in January.

Comments from the annual CERAWeek gathering of oil industry executives and policymakers in Houston have been upbeat on the coordinated output cut effort.

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