US oil rigs count dropped further on the week ending 30 October as drillers removed 16 wells from the field, bringing the total of rigs count still in service to 578. This is the ninth consecutive week that the rigs count has dropped.
This provided additional support for oil price which closed higher at US$46.59 per barrel.
US refineries will be coming back on line soon after a period of maintenance and thus would continue their draw down from the stockpiles, which are already at high levels. This could provide additional support to the price of oil in the coming weeks.
Previously, I have mentioned that October could be a day of reckoning for many oil producers as financial institutions review the credit lines offered to the many stricken oil producers. Looks like they have a second lease of life as many had their credit lines maintained and only a small handful had theirs lowered.
This will put some financial institutions at risk further as many of the oil producers are at risk of default. By extending a temporary lifeline until the next review in spring next year is akin to kicking the can down the road.
Perhaps in part, the financial institutions' decision had been driven by the news that US oil production is finally showing signs of slowing down. In part it has dropped by 500,000 bopd since April.
Continuous drop in production could help oil price to stabilise and the much needed impetus to move northwards one again.
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