LONDON (Reuters) – Oil prices rose on Monday after a key Middle East oil minister suggested the market was rebalancing, but investor sentiment remained under pressure from oversupply and concern over the prospects for global economic growth and fuel demand.
A gas station worker pumps fuel into a motorbike at a gas station of the Venezuelan state-owned oil company PDVSA in Caracas, Venezuela November 2, 2018. REUTERS/Marco Bello
Brent crude oil LCOc1 was up 30 cents a barrel at $60.58 by 1430 GMT. U.S. light crude CLc1 was 10 cents higher at $51.30.
“Oil prices are regaining some ground on the back of bullish rhetoric from OPEC officials,” said Stephen Brennock, analyst at London brokerage PVM Oil.
Both benchmarks fell more than 25 percent through October and November as a supply glut inflated global inventories but have stabilized over the last three weeks, trading within fairly narrow ranges as oil producers have promised to cut production.
Some investors doubt planned supply cuts by the Organization of the Petroleum Exporting Countries and other producers such as Russia will be enough to rebalance markets.
OPEC and its allies have agreed to reduce output by 1.2 million barrels per day (bpd) from January, in a move to be reviewed at a meeting in April.
UAE energy minister Suhail al-Mazrouei told reporters in Dubai on Monday that the global oil market was “correcting” and he expected “everyone” to cut oil supply under the agreement reached earlier this month in Vienna.
But OPEC and its allies have an uphill task.
U.S. shale output is growing steadily, taking market share from the big Middle East oil producers in OPEC and making it harder for them to balance their budgets.
Russian oil output has been at a record high of 11.42 million barrels per day (bpd) in December so far, an industry source familiar with the data told Reuters.
Increasing concerns about weakening growth in major markets such as China and Europe have also dampened the mood in oil and other asset classes.
Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand, while the country’s industrial output rose the least in nearly three years as the economy continued to lose momentum.
Oil prices found some support after energy services firm Baker Hughes said U.S. drillers reduced oil rigs in the week to Dec. 14, pulling the total count to the lowest since mid-October at 873. RIG-OL-USA-BHI
However, the current U.S. rig count, which serves as an early indicator of future U.S. output, is higher than a year ago.
Reporting by Christopher Johnson in London and Koustav Samanta in Singapore; editing by Adrian Croft and Jason Neely