Oil rises on ongoing OPEC-led supply cuts, fall in US rig count

High drilling activity last year resulted in a more than 2 million bpd rise in US production, to 12.1 million bpd reached this February. (Reuters)
Updated 12 March 2019
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Oil rises on ongoing OPEC-led supply cuts, fall in US rig count

  • ‘Downward revisions in global growth forecasts by OECD and ECB have capped bullish gains’
  • Oil markets have generally been supported this year by ongoing supply cuts led by OPEC and some non-affiliated allies

SINGAPORE: Oil prices rose on Monday, lifted by comments from Saudi oil minister Khalid Al-Falih that an end to OPEC-led supply cuts was unlikely before June and a report showing a fall US drilling activity.
US West Texas Intermediate (WTI) crude oil futures were at $56.39 per barrel at 0323 GMT, up 32 cents, or 0.6 percent from their last close.
Brent crude futures were at $65.04 per barrel, up 30 cents, or 0.5 percent.
Despite the gains, markets were somewhat held back after US employment data raised concerns that an economic slowdown in Asia and Europe was spilling into the United States, where growth has so far still been healthy.
“Downward revisions in global growth forecasts by OECD and ECB have capped bullish gains,” said Benjamin Lu of Singapore-based brokerage Phillip Futures.
Oil markets have generally been supported this year by ongoing supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated allies like Russia — known as the OPEC+ alliance. OPEC+ has pledged to cut 1.2 million barrels per day (bpd) in crude supply since the start of the year to tighten markets and prop up prices.
The group will meet in Vienna on April 17-18, with another gathering scheduled for June 25-26, to discuss supply policy.
Saudi oil minister Khalid Al-Falih said on Sunday it would be too early to change OPEC+ output policy at the group’s meeting in April.
“We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward,” Al-Falih said.
Prices were also supported by US energy services firm Baker Hughes’ latest weekly report showing the number of rigs drilling for new oil production in the United States fell by nine to 834.
High drilling activity last year resulted in a more than 2 million bpd rise in production, to 12.1 million bpd reached this February, making the United States the world’s biggest producer of crude oil ahead of Russia and Saudi Arabia.
The slowdown in drilling points to more timid output growth going forward, but because the overall drilling level remains relatively high despite the recent decline, many analysts still expect US crude output to rise above 13 million bpd soon.
“This is the third straight week of decline ... after a number of oil producers trimmed their spending outlooks for 2019,” ANZ bank said on Monday.


Scotland will prepare for a second independence vote regardless of UK: FM Nicola Sturgeon

Updated 19 min 21 sec ago
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Scotland will prepare for a second independence vote regardless of UK: FM Nicola Sturgeon

  • Scotland will start preparing for independence referendum before May 2021 without permission from Westminster
  • London's approval, however, would eventually be necessary

EDINBURGH: Scotland will start preparing for an independence referendum before May 2021 without permission from London, First Minister Nicola Sturgeon said on Wednesday.
Scotland, part of the United Kingdom for more than 300 years, rejected independence by 10 percentage points in a 2014 referendum. But differences over Brexit have strained relations with England and the British government in London.
"A choice between Brexit and a future for Scotland as an independent European nation should be offered in the lifetime of this parliament," Sturgeon told Scotland's devolved parliament.
She said a devolved parliament bill would be drawn up before the end of 2019, and that Scotland did not need permission at this stage from London.
London's approval, however, would eventually be necessary "to put beyond doubt or challenge our ability to apply the bill to an independence referendum," she said.
The United Kingdom voted 52-48 to leave the EU in a 2016 referendum, but while Wales and England vote to leave, Scotland and Northern Ireland voted to stay.
In the campaign for the 2014 independence referendum, unionists said that the only way for Scotland to stay in the EU was to remain within the United Kingdom. The Scottish National Party (SNP), which controls the devolved parliament in Edinburgh, says that a second referendum is justified as Scotland is now being dragged out of the bloc against its will.
With most Scots unhappy at Brexit, Sturgeon is under pressure from independence supporters to offer a clear way forward in the quest to break from the United Kingdom.
Britain is mired in political chaos and it is still unclear whether, when or even if it will leave the European Union.
John Curtice, professor of politics at Strathclyde University and Britain's leading polling expert, said Sturgeon was keeping her own troops happy while leaving her options open.
She probably has until October or November of 2020 to hold a new vote once Brexit happens, he said.
Since Scots rejected independence 55-45 percent in 2014, polls show that support has changed little. Grassroots supporters will launch a new campaign this week before the SNP spring conference this weekend.
"I think she was implicitly acknowledging that while it might be impossible (to get permission) out of the current (UK) parliament, it might be a lot easier if we get a general election between now and the end of the year, and the SNP may well find itself in the kingmaker role," Curtice told Reuters.
Her address took a noticeably conciliatory tone.
"The question that confronts us now is this: if the status quo is not fit for purpose - and I know even some of the most committed believers in the union find it hard to argue that it is - how do we fix it?" she said.
Those who want to maintain the United Kingdom argue that Brexit has made no difference to how Scots feel, and the secession vote should not be repeated.
"Nicola Sturgeon continues to press for divisive constitutional change when it is clear that most people in Scotland do not want another independence referendum," said David Mundell, Britain's Scotland minister.
Sturgeon argued that leaving the world's largest trading bloc endangers Britain and Scotland's economic well-being.
"We face being forced to the margins, sidelined within a UK that is itself increasingly sidelined on the international stage. Independence by contrast would allow us to protect our place in Europe."