Oil prices edge up on OPEC-led supply cuts, lower US drilling activity

FILE PHOTO: A pump jack operates in the Permian Basin oil production area near Wink - Reuters

SINGAPORE (Reuters): Oil prices edged up on Monday, supported by ongoing supply cuts from producer club OPEC and Russia and by a drop in US drilling activity.

International Brent crude oil futures were at $60.75 per barrel at 0040 GMT, up 27 cents, or 0.5 percent, from their last close.

US West Texas Intermediate (WTI) crude futures were up 22 cents, or 0.4 percent, at $51.81 a barrel.

Economic research firm TS Lombard said oil “prices are likely to stabilise around current levels and quite possibly drift upwards”, pointing to supply cuts from the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC allies, including Russia, as a fundamental driver.

Drillers cut four oil rigs in the week to Jan. 11, bringing the total count down to 873, energy services firm Baker Hughes said in a weekly report on Friday.

However, TS Lombard said oil prices may not rise much higher as “the world economy is now slowing... limiting the scope for positive surprises in oil demand and hampering inventory reduction.”