U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed early Monday. Both futures contracts traded higher shortly after the opening, driven by a weaker U.S. Dollar and increased demand for risky assets.
At 0640 GMT, May WTI crude oil is trading $61.86, down $0.06 or -0.10% and June Brent crude oil is at $65.35, up $0.08 or +0.12%.
Traders are saying the early price action was related to a drop in the number U.S. rigs drilling for more production and Friday’s robust U.S. Non-Farm Payrolls report, which could lead to increased demand.
According to energy services firm Baker Hughes, U.S. energy companies last week cut oil rigs for the first time in almost two months, with drillers cutting back four rigs, to 796.
Despite the drop in the rig count, which is often used an as early indicator of future production, activity remains much higher than a year ago when just 617 rigs were active. The news is not likely to change the outlook for rising U.S. production which is now up to 10.37 million barrels per day (bpd).
Forecast
The news is expected to be light on Monday so most traders expect the price action to be driven by the U.S. Dollar and appetite for risk. The most bullish scenario will be a weaker U.S. Dollar and higher equity prices. Prices could trade sideways if the dollar strengthens along with stocks. Crude oil prices could weaken if the dollar rallies and stocks weaken.
The most significant price action this week is likely to take place after the release of the American Petroleum Institute’s weekly inventories report on Tuesday and Wednesday’s U.S. Energy Information Administration report.