Crude Oil Prices Back on Track After US Rig Count Decline

Pulled down by the weakness in the US crude oil price benchmark, the United States Oil Fund LP (ETF) (NYSEARCA: USO) had fallen 0.66% during the day.

According to Dr. Al Rumhy, oil prices might recover by 25 percent by the end of the year, from the current level of around $37 per barrel for Oman Crude.

Brent's front-month rose 24 cents to $40.68 a barrel.

Today's rally, however, didn't save Brent oil futures from finishing negative this week, after they posted the biggest two-day drop since mid-February, losing as much as 6%.

Futures were unchanged in NY after slipping 0.2 percent yesterday.

Oil markets have been rife with speculation Opec and non-Opec producers will agree an output freeze deal to support prices at a meeting in Doha next month.

Despite rising almost 50% since mid-February when it exceeded $26 per barrel (/b), the prompt-month New York Mercantile Exchange (NYMEX) crude oil futures contract has struggled to hold over $40/b.

Some analysts concluded that Saudi Arabia might simply be testing its fellow producers' willingness to cooperate and comply with a relatively benign freeze commitment (other than for Iran) before proposing a production cut at Opec's June meeting. Markets were closed Friday for the Good Friday holiday. For shale production to actually grow, the industry needs a $60-70 per barrel price, Scott Sheffield, CEO of Dallas-based Pioneer Natural Resources, said at the same event.

Deshpande believed that investors "got a little over-excited" about the news of a potential meeting of oil producers and following US oil companies signaling a decline in output this year, which would help reduce supply.

The USA crude inventories rose by 9.4 million barrels in the last week to their another consecutive record, three times larger than analysts' expectations for an increase of 3.1 million barrels. Crude Oil price is trading with a positive tone.

A pullback in refinery runs at a time of higher imports will likely push crude inventories higher, further weighing on flat prices.

Zuberi is far more optimistic about the second half of this year: "We believe that the supply-demand gap will reverse in the second half of 2016 and early 2017".

Kuwait said on Tuesday it had agreed with Saudi Arabia to resume production at the jointly operated Khafji field, which shut in October 2014 for environmental reasons, having been producing between 280,000 and 300,000 barrels per day.

Vanessa Coleman