REUTERS
Oil prices are on the rise again, supported by Asian stock markets and a reduction in the number of active drilling rigs in the United States, with analysts saying falling oil prices give a big boost Asian importers.
By 0921 Moscow time, Brent futures had risen by $1.05 to $60.59 a barrel, while futures for WTI were up by $0.45 to $50.04. On Monday, Brent fell nearly by 5% amid record high oil inventories in the United States.
"Brent crude prices [are] attempting to rally on rapid week-on-week reduction in the U.S. ... rig count," Morgan Stanley said in a report.
Last week the number of working rigs fell by 33.
"The current US horizontal and vertical rig count across the Permian, Eagle Ford, Bakken and Niobrara shale [fields] implies that U.S. oil production growth will reach 385,000 [barrels per day year-on-year] by [the fourth quarter of this year], down 55,000 [barrels a day] versus last week’s rig count," Goldman Sachs said on Monday.
However, oil production in the United States and the Middle East remains high, exceeding demand, which could keep a lid on oil prices.
"Saudi, UAE (United Arab Emirates), Iraqi and other Middle Eastern production and exports [are] all higher [to year date], adding to supply pressure," Morgan Stanley said.
The sharp drop in oil prices that started from last June comes gives a boost to Asian importers, who are seeing huge benefits as their fuel costs drop, analysts say.
"Cheap oil is a blessing for Asia, as the drop in oil prices provide windfall effects for Asia’s large net oil importers," Dutch bank ABN Amro said in its quarterly outlook.
According to analysts of the bank, it is expected that cheap oil will trigger economic growth in India, Hong Kong, Singapore and Thailand, but China's economy is likely to continue slowing despite the gains from lower energy prices.