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Abu Dhabi, UAEThursday 20 September 2018

Oil wobbles but stays near nine-week highs

Supported by robust US jobs data last week and a slight fall in the US drill rig count

A worker inserts a drill tube into the rotary mantle of a drilling rig. Oil is still near nine-week highs. Vincent Mundy / Bloomberg
A worker inserts a drill tube into the rotary mantle of a drilling rig. Oil is still near nine-week highs. Vincent Mundy / Bloomberg

Oil prices edged lower on Monday but still held near nine-week highs, supported by robust US jobs data last week and a slight fall in the US drill rig count, even as rising output from Opec capped crude markets.

Global benchmark Brent crude futures were down 6 cents, or 0.11 per cent, at US$52.36 a barrel at 0309 GMT.

US crude futures were down 7 cents, or 0.14 per cent at $49.51 per barrel.

Prices for both benchmarks have been on the rise, holding near their highest since late May, when oil producers led by Opec extended a deal to reduce output by 1.8 million barrels per day (bpd) until the end of next March.

"Crude oil prices rose strongly as investors viewed (U.S. jobs) data as a positive sign for oil demand in the United States ... A small fall in the number of drill rigs operating in the U.S. also supported prices," ANZ bank said in a note.

US employers added an above-forecast 209,000 workers in July and raised wages, the US labour department said on Friday in its monthly jobs report.

US drillers cut one oil rig in the week to August 4, bringing the total count down to 765, the energy services firm Baker Hughes also said on Friday.

Still, the US rig count has been trending upwards since mid-May, and oil production in the United States hit 9.43 million bpd in the week to July 28, the highest level since August 2015.

Michael McCarthy, the chief market strategist at CMC Markets, said, supportive news such as big drawdown in US supplies would be needed to push US WTI prices above $50 a barrel.

"This week, weekly data out of the US should be really influential ... if [US daily production] makes further gains given the high prices, I think that would be a catalyst for downside news," Mr McCarthy said.

Meanwhile, Opec's crude oil exports in July rose to a record high of 26.11 million bpd, most of which came from Nigeria, according to a report by Thomson Reuters Oil Research last week.

Libya, though, one of the Opec members who has been exempt from the Opec-led production cuts, was facing a gradual shutdown of its 270,000-bpd Sharara oil field after the closure of a control room.

Officials from a joint Opec and non-Opec technical committee are set to meet in Abu Dhabi on Monday and on Tuesday to discuss ways to boost compliance with their supply reduction agreement.

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