Another negative week for the US oil and gas industry, with oil rig numbers now tumbling below their level at the close of 2023.
At the same time, US and global prices fell by between 4% to more than 5%, even though the Gaza situation remains volatile as Israel and Hamas dance around the idea of a longish ceasefire.
The ceasefire talk took a bit of heat out of prices, and the attacks in the Red Sea seem to have eased, but it was the latest data on weekly inventories in the United States that clearly weighed on prices.
US stocks rose by 7.3 million barrels, whereas analysts were looking for a smaller 2.3 million fall.
Traders say the rising stock level in the US will see the OPEC+ group extend its production quotas beyond June.
US West Texas Intermediate-style crude settled at $US78.11 on Friday, down 6.8% for the week, then fell another 1.2% in after-hours trading to be down 8% overall.
Global Brent futures lost 6% for the week to settle at $US82.96 and then fell another 0.22% in after-hours trading.
The oil rig use data definitely had an impact this week on prices.
The weekly data from energy services company Baker Hughes showed the weekly rig count oil dropped to 499 from 506, while gas lost three rigs week to week at 102. The miscellaneous tally grew by two to four.
A year earlier, the US had 588 oil, 157 gas, and three miscellaneous rigs in operation. There were 500 oil rigs in use at the end of 2023. Rig numbers were as high as 511 this year before sliding sharply in mid-April.
A total of 605 rigs were operating in the US last week, down from 748 a year earlier.
"Oil prices are heading for their steepest weekly decline in three months on demand uncertainty, as rates are expected to stay higher for longer, and easing tensions in the Middle East reducing supply risks," Saxo Bank's Ole Hansen, head of commodity strategy, said in his weekly note on Friday.
The correction gained momentum on Wednesday, Hansen said, when the US Energy Information Administration reported that crude inventories climbed to a June high.
"While the increase was in line with seasonal trends, it was another disappointing drop in implied gasoline demand to a 2020 low that caught the attention," he said.
"Total demand for the three main fuels has seen a five-week decline to levels last seen in 2020 when the Covid-related shutdowns saw US and global demand temporarily collapse.”
In other commodities, gold, copper, and iron ore all marked time.
