Oil price is gaining Monday on reports that US rig count dropped the most since January after a record expansion earlier this year with Brent trading at $55.57 per barrel.
Rigs targeting crude fell by seven to 749, according to data Friday from Baker Hughes. Drillers haven’t added any new machines during the past five weeks, capping in August the first monthly drop since May 2016.
This is coming amidst report by the International Energy Agency, IEA that a dearth of new investment in oil production is stoking a risk of tighter crude supply and unstable prices, even as demand growth is expected to slow over the next five years.
The worldwide cushion of spare production capacity will shrink without further investment in exploration and output, Neil Atkinson, the head of the IEA’s oil markets and industry division, said at a conference in Manama, Bahrain.
“There are still not enough signs of investment beginning to return, and that raises the risk of tightening of the market in the next five years and a risk to the stability of oil prices,” he said Sunday. “There is at least a possibility of going back to the situation we had 10 years ago where oil prices were very, very high at a time when demand was growing.”
