Oil steady as U.S. drilling tempers bullish sentiment

Oil barrels
Oil barrels

Oil prices were steady on Monday as a rising U.S. rig count pointed to further increases in American output.

Brent crude oil futures were at 74.07 dollars per barrel at 0354 GMT, virtually unchanged from their last close.

U.S. West Texas Intermediate, WTI, crude futures were  at 68.37 dollars a barrel.

U.S. drillers added five oil rigs, drilling for new production in the week-ended April 20, bringing the total-count to 820, highest since March 2015, according to General Electric’s Baker Hughes energy services firm.

Only Russia produces more at almost 11 million bpd.

Prices are being supported by the supply cuts led by the Organisation of the Petroleum Exporting Countries, OPEC, that were introduced in 2017 to prop up the market.

“Added price pressure comes from U.S. sanctions against the key oil-exporting nations of Venezuela, Russia and Iran,” said J.P. Morgan Asset Management Global Market Strategist, Kerry Craig.

He was referring to action the U.S. government had taken on Russian companies and individuals, as well as on potential new measures against struggling-Venezuela and OPEC-member Iran.

“Stay long, oil,” U.S. bank J.P. Morgan said in a separate note to clients.

The United States has until May 12, to decide whether it will leave the Iran nuclear deal.

The U.S. trade action against Russia, and potentially, against Iran, has resulted in a slump in Russia’s ruble and Iran’s rial.

This means costs for any imported goods become more expensive for its citizens or companies, but it has also pushed up the value of Russia’s and Iran’s oil sales as all of their production costs are in the local currencies.

Meanwhile, foreign sales are virtually all made in the U.S. dollar.

Trump on Friday accused OPEC of “artificially” boosting oil prices, threatening on Twitter that this “will not be accepted”, drawing rebukes from several of the world’s top oil exporters within OPEC.