Crude oil price on Monday edged up to about $49 per barrel after fewer drilling rigs were added in the United States, thus easing concerns that surging shale supplies will undermine the efforts by the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC to reduce the level of inventory in the oil market.
While the Brent crude, the global benchmark traded at $48.99 per barrel, the US crude traded at $46.57 per barrel.
Reuters quoted Baker Hughes as reporting that US drillers added two oil rigs in the week to July 14, bringing the total to 765.
Rig additions over the past four weeks averaged five, the slowest pace of growth since November, the report said.
A sharp drop in US crude inventories in the week to July 7 supported prices last week. But crude stocks in industrialised nations remained high, putting a brake on the oil price rally.
Oil prices are less than half their mid-2014 level because of a persistent glut, even after the Organization of the Petroleum Exporting Countries with Russia and other non-OPEC producers cut supplies since January.
While OPEC-led cuts have offered prices some support, rising supplies from Nigeria and Libya, two OPEC states exempt from the pact, and increasing U.S. production have weighed on the market.
Kuwait said on Friday the market was on a recovery track due to rising demand and said it was premature to cap Nigerian and Libyan output.
An OPEC and non-OPEC committee meets in Russia on July 24 to discuss the impact of the deal.
Under the supply deal, OPEC is curbing output by about 1.2 million bpd, while Russia and other non-OPEC producers are cutting half as much, until March 2018.
The Nigerian and Libyan recovery has prompted talk among producers about asking them to join the supply deal.
The Secretary General of OPEC, Muhammadu Barkindo downplayed expectations this would be addressed soon, saying a meeting on July 24 in Russia of some OPEC and non-OPEC ministers would discuss Nigerian and Libyan output only at a technical level.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had stated recently that Nigeria would in due time join in the crude oil production cut, stressing that the country’s production levels were still quite unpredictable as to guarantee when the country would join the pact.
In a sign of strong demand, data last Monday showed refineries in China increased crude oil throughput in June to the second highest on record. OPEC is hoping higher demand in the second half will get rid of excess inventories.