10 June 2016, New York — Oil prices fell nearly 2 pct on Friday as investors braced for another likely rise in the U.S. oil rig count this week and as a strong dollar again weighed on demand for crude futures denominated in the greenback.
A slide in equity prices on Wall Street .SPX also pressured futures of Brent and U.S. crude’s West Texas Intermediate (WTI).
More sabotage of Nigeria’s oil industry by rebels had limited losses in Brent and WTI earlier in the session. The Niger Delta Avengers group blew up the Obi Obi Brass trunk line for oil run by ENI (ENI.MI), adding to the woes of Africa’s largest oil economy.
Brent’s front-month contract LCOc1 was down 91 cents, or 1.7 percent, to $51.04 a barrel by 10:10 a.m. EDT, after setting a session low of $50.88. On Thursday, it hit a 2016 high of $52.86.
WTI’s front-month CLc1 traded down 82 cents, or 1.6 percent, at $49.74, after falling more than $1 earlier to a session low of $49.53.
Brent and WTI remained on track for weekly gains, although that could change if prices slipped further on the weekly reading for the U.S. oil rig count by industry firm Baker Hughes, due at 1:00 p.m. EDT.
Baker Hughes said last week U.S. oil drillers added 9 rigs in the week to June 3, bringing the count up to 325, as oil prices traded above or near $50.
That was only the second time this year that oil rigs had risen. Prior to that, drillers cut on average 10 oil rigs per week this year, after reducing on average 18 rigs per week last year, on worries of oversupply.
“Today’s oil rig count could exert a price impact with any increase,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates, citing concerns that the decline in U.S. crude production may be abating.
Crude futures have almost doubled from 13-year lows hit during the winter as supply disruptions from Nigeria, Canada, Libya and Venezuela combined with lower U.S. production to ease a glut that pulled prices down 70 percent from a mid-2014 peak.
The dollar index .DXY was up nearly half a percent for a second straight day, adding to the weight on oil, as jittery global financial markets sent investors toward safe-haven currencies.
*Barani Krishnan, Dmitry Zhdannikov; Editing – Bernadette Baum