Oil edges up on reduced US drilling, booming job market

Oil markets edged up on Monday on the back of a drop in the number of US rigs generating higher production and as the US economy continues to create jobs, which is hoped to drive higher fuel demand.

US West Texas Intermediate (WTI) crude futures CLc1 were at $61.75 a barrel at 5 pm, down 29 cents. “A falling rig count and the strong employment data may have helped support prices,” said William O’Loughlin, investment analyst at Rivkin Securities.

The US economy added the biggest number of jobs in more than one and a half years in February, with non-farm payrolls jumping by 313,000 jobs, the US Labor Department said on Friday.

In oil markets, US energy companies last week cut oil rigs for the first time in almost two months, with drillers cutting back four rigs, taking the number down to 796, energy services firm Baker Hughes said on Friday.

Despite the lower rig count, which is an indicator of future output, activity remains much higher than a year ago when just 617 rigs were active.

Most analysts expect US crude oil production – which has already risen by over one-fifth since mid-2016 to 10.37 million barrels per day (bpd) – to rise further.

That’s more than top exporter Saudi Arabia produces and almost as much as Russia pumps out, at nearly 11 million bpd.

Singapore-based brokerage Phillip Futures said that the oil market “will focus on [monthly] OPEC and IEA reports this week for a sensing on global demand/supply levels for crude oil” and that items in focus will include Organization for Economic Cooperation and Development commercial stock levels, revision in global demand and supply for crude oil, as well as the Organization of the Petroleum Exporting Countries’ (OPEC) compliance on production levels.