Oil rises on record US rig slump

02 February 2015 – Crude oil prices rose on Monday as investors shrugged off bearish Chinese data and news of a US refinery strike and focused on a falling US rig count that signalled lower production down the line.

“There were a lot of people on the sidelines waiting for an opportunity to buy,” said Bjarne Schieldrop, chief commodity analyst at SEB.

“Brent has moved sideways for a while but it closed above the 20-day moving average on Friday for the first time since July, and that has encouraged people to come in.”

At 1102 GMT Brent crude futures were up $1.04 at $54.03 a barrel, after leaping as high as $55.62 and dipping as low as $51.41, as the bulls battled with the bears.

US crude was up 48 cents at $48.72 a barrel, after touching an intraday high of $50.56 and slumping to $46.67 in Asian trading.

Both contracts had rallied about 8% on Friday, fueled by month-end short-covering and a record weekly drop in the number of US oil rigs employed, according to industry data from Baker Hughes. The count is now down 24% from its October peak.

On Sunday, workers at nine US refineries and chemical plants went on strike in an effort to pressure oil companies to agree to a new national contract.

“So far only a handful of refineries have been affected, but the last time they went on strike like this, in 1980, it lasted for three months,” said Ole Hansen, senior commodity strategist at Saxo Bank.

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