Morning Market Overview
Oil prices ended Friday’s trading session higher for the second weekly gain in a row. The main drivers were a growing view that US sanctions on Iran are likely to result in a reduction in Iranian crude oil exports and a report by Reuter’s that Unipec would resume purchases of US crude oil starting in October suggesting that China will not be imposing tariffs on US crude oil imports.
Overall the oil market sentiment shifted slightly to the bullish side over the last few weeks after an extended period of bearish views permeating throughout the complex. There is still a high level of uncertainty over which side of the equation will win out… production increases or the potential additional loss of supply for the many geopolitical events evolving around the world including Iran. For the last two weeks the view has shifted to the production loss side.
Friday afternoon the latest Baker Hughes data hit the media airwaves reporting the number of rigs deployed to the US oil sector declined by 9 rigs on the week after coming unchanged during the previous week. Total rigs deployed to the oil sector are higher by 101 or 13.3 percent year over year. Oil rigs declined with US crude oil production increasing last week. US crude oil production continues in an overall uptrend setting new production records on a weekly basis. Total US crude oil production is about 16.8 percent above where it was for the same week a year ago. This week’s production came in at 11 million bpd.