After the information from the Baker Hughes, an American oilfield service company about the increase in the number of active oil rigs in the reporting week (by 7 rigs, up to 414 rigs), the price of oil fell at the end of the trading day last Friday. The number of drilling rigs in the USS has been increasing in the past 10 weeks. During the last three months the US companies have increased the number of drilling rigs by 91 units, which is approximately 30% above the 9-month lows reached in May. Productivity of rigs is also increasing.
Oil market participants fear that the recent rise in oil prices is encouraging US shale oil producers to increase the number of drilling rigs, despite excess supply of oil in the world.
With the opening of the trading day on Monday, oil prices continue to fall. November futures for crude oil Brent fell by 1.90%, to 47.1 per barrel at the ICE Futures. Spot price of crude oil Brent fell below the strong support level of 47.60 and has been maintained at the level of 47.35 since the beginning of European session.
At a conference in Singapore last week some oil market analysts expected that US shale oil producers reach breakeven point when oil prices ate at the level of $40-60 per barrel. Therefore, as long as the price of oil remains below this level, the number of drilling rigs in the USA will increase, which is a very negative factor for the oil market, where the supply exceeds the demand.
An informal OPEC meeting will be held in Algeria later in September. Chances that the largest producers of oil in the world will agree to freeze current level of oil production are decreasing with the approaching of the time of the meeting.
Last week Fed Boston head, Eric Rosengren suggested the increase in the interest rates in the United States, which caused the rise in the USD and, consequently, the decrease in the commodities, including oil.