Oil futures finished lower on Friday but still notched up a big gain for the week after those attacks on Saudi Arabian production facilities last weekend.
The Saudis claim the facilities (including a huge oil stabilisation plant that handles 7 million barrels of oil a day) will be back online by the end of this month (next week) but many oil industry analysts question that optimism.
As the Saudis “reveal the extent of damages, the market mood has shifted to questioning how quickly production can be restored,” Manish Raj, chief financial officer at exploration and production firm Velandera Energy Partners, told MarketWatch.com.
“We are familiar with the repair and maintenance processes in oilfield services, and the damages appear to be far worse than what can be restored within a matter of a few days,” the analyst said.
Oil futures jumped nearly 15% on Monday (19% was the peak gain in the session) in the aftermath of weekend attacks. Saudi officials on subsequently claimed they were on track to restore production by month-end which saw prices ease.
By the close Friday West, Texas Intermediate crude for October delivery ended at $US58.09 a barrel in New York, with the contract for a weekly gain of 5.9%, largest for the US crude since the week ended June 21. The October contract expired at the end of the session.
The November WTI which is now the front-month contract, shed 10 cents, or 0.2%, to settle at $US58.09.
In Europe, the global benchmark, November Brent crude lost 12 cents, or 0.2%, to $US64.28 a barrel for a 6.7% weekly gain — the largest since January.
Friday also saw oil services group, Baker Hughes report a fifth weekly fall in the number of active US rigs drilling for oil, suggesting a further slowdown in production.
Baker Hughes said the number of active oil rigs fell by 14 to 719. That followed declines in each of the last four weeks.
The total active US rig count, meanwhile, also fell by 18 to 868, according to Baker Hughes.
The total number of rigs is down 185 from a year ago.
Oil rigs in use have seen a loss of 147 rigs in the past year, with gas rigs down 38 since this time last year, compared to 858 and 187 active rigs, respectively, at the beginning of 2019.
US weekly oil production remains near an all-time high. So while the number of oil rigs has declined by 158 this year alone, production has grown from 11.7 million BPD at the beginning of the year, to 12,4 million barrels a day in the week ending September 13.
That tells us a lot about improved productivity and lower production costs for the sector.
