Oil prices are on course to book their best performance in the month of January since 2005, despite starting this week with losses after Friday’s rig count report showed a first U.S. weekly rig increase for 2019.
On Friday, Baker Hughes reported modest rise in the number of active oil and gas rigs in the United States last week. The total number of active oil and gas drilling rigs rose by 9 rigs, according to the report, with the number of active oil rigs increasing by 10 to reach 862 and the number of gas rigs decreasing by 1 to reach 197. As of last week, the oil and gas rig count was 112 up from this time last year, 103 of which was in oil rigs.
Signs that shale drillers could be adding more supply sent oil prices lower early on Monday. Prices were also dragged down by another set of weak Chinese economic data, with industrial companies reporting lower profits for December, for a second month in a row, stoking concerns over whether a possible industrial slowdown could result in slower growth pace in Chinese crude oil imports this year.
Still, as of Monday, four days before the end of the month, oil prices have gained 12 percent so far in January.
This is the largest rise in the price of oil for January since January 2005, when prices jumped by 14 percent, according to Reuters estimates. Related: A Rare State Of Affairs For Refiners
The low oil prices in the fourth quarter of 2018 have led to U.S. shale drillers restraining activity, Reuters quoted a note by Commerzbank as saying on Monday.
“Because prices have risen considerably since the start of the year and there is a high number of drilled but uncompleted wells, drilling activity is likely to recover soon,” according to the bank.
In addition, hedge funds and other money managers have boosted their net long position in Brent Crude in six out of the past seven weeks, exchange data compiled by Reuters analyst John Kemp showed. Most of the net long position, however, was the result of closing of shorts, rather than opening of new long positions.
By Tsvetana Paraskova for Oilprice.com
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