US rig count drop bolsters Brent

The front-month ICE Brent contract has gained by $0.97/bbl on the day, to trade at $62.06/bbl at 09.00 GMT.

IMAGE: Oil storage facility. Getty Images

Upward pressure:

Brent crude’s price has moved higher after official drilling figures showed a decline in US oil rigs. The total number of oil rigs fell by eight over the week to 406, according to Baker Hughes.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

In a tight market, any signal of reduced future supply can put upward pressure on Brent’s price.

Additionally, oil prices have risen amid growing concerns over supply disruptions from Venezuela. Earlier this week, the US government intercepted an oil tanker off Venezuela’s coast, triggering fresh supply-related worries in the market.

Downward pressure:

Meanwhile, the US-mediated ceasefire talks between Russia and Ukraine have shown no tangible progress this week.

This has resulted in a broadly bearish takeaway for the oil market, according to analysts.

There are no signs of “further escalation or rhetoric capable of driving crude’s Russia risk premium higher,” VANDA Insights’ founder Vandana Hari said.

By Aparupa Mazumder

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