At the end of last week, OPEC remained bullish on oil demand, while US drillers were less optimistic, and US demand remained difficult to gauge, according to traders and analysts.
The prices of West Texas Intermediate (WTI) and Brent were weak on Friday. WTI fell by half a percent on Friday and 1.5% for the week, while Brent, the global marker crude, was up nearly 0.3% in late trading but still lost 1.8% for the week.
US energy firms last week cut the number of oil and natural gas rigs operating for the fifth time in six weeks, according to the end-of-week report from energy services firm Baker Hughes. The oil and gas rig count fell by one to 584 in the week ending July 12.
Baker Hughes reported that oil rigs fell by one to 478 (from 500 at the end of 2023), marking their lowest count since December 2021, while gas rigs also fell by one to 100. This puts the total rig count down 91 rigs, or 13%, compared to this time last year.
The oil and gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due to declining oil and gas prices, higher labor and equipment costs from soaring inflation, and companies focusing on debt reduction and shareholder returns rather than increasing output.
Higher oil prices should encourage drillers to boost US crude output from a record 12.9 million barrels per day (bpd) in 2023 to 13.3 million bpd in 2024 and 13.8 million bpd in 2025, according to the latest US Energy Information Administration (EIA) outlook. US crude production two weeks ago was around 13.3 million barrels a day, up a million barrels from a year ago.
Government data released Wednesday showed that commercial crude stockpiles in the US fell last week, despite earlier forecasts of an increase.
On Wednesday, the Organization of the Petroleum Exporting Countries (OPEC) kept its 2024 and 2025 global oil demand growth forecasts unchanged at 2.2 million barrels per day and 1.8 million barrels per day, respectively. Traders believe these forecasts are still too high.