Oil price reaches almost $40 per barrel

Oil price reaches almost $40 per barrel

Reports that the number of US oil rigs has dropped are pushing up world oil prices. The number of oil rigs in the US dropped by 2.6% this week.

This morning, prices for May futures for Brent oil rose by 0.76% to $39.48 per barrel, the April futures price for WTI crude oil increased by 1.87% to $36.59, RIA Novosti reports.

The last time the price of Brent crude rose above $39 per barrel was in early January, and it hasn't risen above $39.5 since December 2015.

On February 29 the United States reduced the number of oil rigs by 8 (13, according to another source) to 489 rigs. In annual terms, this means a decline of nearly 60%.

The steady rise in oil prices is continuing for three weeks due to reduction of  US oil production to a minimum – the level of November 2014. At the same time, the April futures price for WTI crude oil increased by 1.8% to $36.5 per barrel.

According to Bloomberg, the rise in oil prices is due to the decision of US companies to cut the number of active rigs, which should lead to a decrease in production. According to Baker Hughes Inc., rigs targeting oil fell by 8 to 392, which is the smallest level since December 2009. According to US Commodity Futures Trading Commission data, the prospect of prices sinking to $20/bbl faded, the agency noted.

"We’re starting to see US production levels decline and if that continues, it could easily drive momentum in oil a bit further. Still, the higher prices go, the more vulnerable they are to some sort of correction, given we’re moving into a period of seasonal weakness," a chief analyst at CMC Markets in Sydney, Ric Spooner, told Bloomberg.

Recall, the situation on the oil market began to worsen since the summer of 2014, when oil prices for have began to decline sharply. As a result, the price of a barrel of Brent crude oil has fallen from $ 115 to $ 36 by the end of 2015. In 2016 the situation deteriorated even more - prices fell below $ 30 per barrel.

Russia, Qatar, Venezuela and Saudi Arabia have agreed to freeze oil production at the level of January 11 at a meeting in Doha on February 16 to support world oil prices, if other manufacturers join the initiative. Ecuador, Algeria, Nigeria, Oman, Kuwait, the United Arab Emirates have expressed their willingness to support the initiative. Iran and Iraq have spoken so far only about steps to improve the situation in the oil market.