Crude Oil Is Weaker Due to the Higher Rig Count
After gaining for three consecutive trading weeks, crude oil opened lower on Monday. The increase in US oil rigs is offsetting signs of increased demand and supply cuts. Increased US oil rigs are weighing on prices.
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According to data released by Baker Hughes, US drillers added 11 rigs last week and increased the total rig count to 683—the highest US rig count in two years. The oil market’s trading activity was subdued due to Good Friday and Easter holidays. A better-than-expected 6.9% rise in China’s GDP in the first quarter and stronger March economic data are sending stronger demand signals. The price is also supported by OPEC and non-OPEC producers’ supply cuts amid speculations of a supply cut extension. North Korea’s failed ballistic missile test increased geopolitical tensions and lowered the market’s risk appetite.
At 6:15 AM EST on April 17, the West Texas Intermediate crude oil futures contract for May 2017 delivery was trading at $52.77 per barrel—a fall of ~0.77%. The Brent crude futures contract for June 2017 delivery fell ~0.73% to $55.47 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $36.33 after falling 2.4% on April 13.
Metals are stronger in the early hours on Monday. Copper regained strength on April 17 amid China’s stronger-than-expected GDP and March economic data such as retail sales, industrial production, and fixed-asset investment data. Considering that China is the largest copper consumer, China’s economic conditions impact copper’s demand and price.
At 6:20 AM EST on April 17, the COMEX copper futures contract for May 2017 delivery was trading at $2.59 per pound—a gain of ~0.64%. The PowerShares DB Base Metals ETF (DBB) rose 0.7%, while the SPDR S&P Metals & Mining ETF (XME) fell 1.7% on April 13. Gold (GLD) and silver (SLW) were stronger in the early hours. The weaker US dollar and increased demand for safe-haven assets are supporting gold prices. Platinum and palladium are stable in the early hours. The weaker dollar supports dollar-denominated commodities such as copper and gold.