Crude-oil futures pushed higher Monday, with some investors continuing to bet that oil prices have bottomed out. U.S. light, sweet crude futures for delivery in March rose 38 cents, or 0.7%, to $53.16 a barrel in the Globex electronic session. Nymex is closed Monday for Presidents Day, and futures trading on Globex will end at 1 p.m. Eastern. Brent crude for April delivery rose 72 cents, or 1.1%, to $62.24 a barrel on London’s ICE Futures exchange. The recent rally in crude prices has been stronger for Brent than for Nymex West Texas Intermediate, with Brent trading near its highest level so far this year and above $60 a barrel. Oil ended higher last week, with Nymex gaining 2.1% and Brent gaining around 4.8% on strong economic data from Europe. Prices have posted weekly gains for the past three weeks.
Oil prices on Monday were also supported following an explosion at Libya’s largest oil field. An explosion has affected the pipeline from Sarir, until now the country’s highest-producing oil field at about 200,000 barrels a day, a spokesman for Libya’s state-owned National Oil Co. said Saturday, warning it may have to stop all of its operations if militant attacks continue.
Fewer drilling rigs: Sentiment is also supported by latest Baker Hughes data showing that the number of drilling rigs deployed in the U.S. fell for the 10th week in a row, reaching a three-year low of 1,056. Strong operating rates at oil refineries and refining margins as well as purchases of North Sea oil cargoes by Asian companies have helped support Brent crude prices, Adam Longson, head of energy research at Morgan Stanley, said in a note. However, Nymex WTI crude has struggled to break out of its narrow price range and the U.S. oil market is struggling with congestion again, resulting in the premium of Brent crude to WTI crude widening further, he said.
Strong refinery demand over the next couple of months, adequate global oil storage and U.S. oil transportation bottlenecks could help delay or prevent Brent from falling to between $20 and $30 in the second quarter, Longson said. U.S. equity and bond markets will be closed Monday for the Presidents’ Day holiday, although futures will trade for part of the day. Asian trading is likely to be thin later this week due to the Lunar New Year holidays.