What a difference a rig makes.
Market Watch reported yesterday that the number of active oil rigs rose by one, from 674 to 675, while the total active-rig count (a combination of oil rigs and natural gas rigs) fell 8 rigs to 877. The difference of one rig in relation to the decrease in overall active rigs raised the per-barrel price of oil deliverable in October rose from $45.42 to $45.78.
A separate report from Market Watch said the increase Friday may be an indicator that the price of oil futures may be in for its best week in more than five years.
Yet the spike in per-barrel value comes in the midst of a season of relatively low oil prices, a trend that may change as production is forecast to decrease and the world economy returns to full strength.
Market analyst Phil Flynn was quoted as saying that global demand “is at the strongest we have seen in five years.”
Already this year, global oil-demand growth is the strongest we have seen in five years and if we see that surge in the last half of the year, we could see the market tightening much quicker than anticipated
As demand increases and production decreases, prices will most likely rise. Another factor in the projected rise in oil prices are OPEC companies who are feeling the sting of high production costs and low price points.
Eventually, OPEC will most likely pressure refineries to “reduce production,” SDKA International’s Ted Izatt was quoted as saying.
Oil-producing countries have such high cost structures that they cannot survive low oil prices long term. Long term, there will be increasing pressure for OPEC to reduce production.
The United States is providing plenty of demand for oil, rebounding from the throes of the recession to contribute to the rise in oil futures, Fuel Fix reported.