By Geoffrey Smith
Investing.com -- Crude oil prices rebounded from overnight lows in early trade in New York as strong existing home sales eased growing concern about the sustainability of the U.S. economic rebound.
By 10:35, U.S. crude futures were essentially unchanged from Thursday’s close at $41.05 a barrel, while the international marker Brent was down 0.1% at $43.26 a barrel.
Gasoline RBOB Futures futures edged up 0.2% to $1.2605 a gallon.
There was little in the way of industry-specific news to move prices on Friday, leaving the market at the mercy of macro and geopolitical stories. Reports of a near miss between a U.S. fighter plane and an Iranian passenger jet raised eyebrows but had little impact on prices.
Prices eased overnight after President Donald Trump hinted at ramping up the trade war with China in his briefing on the Coronavirus on Thursday. The thinking behind his hint was spelled out with greater force and clarity by Secretary of State Mike Pompeo, in a speech that clearly subordinated trade to security concerns.
“Smooth international trade relations are needed for oil demand to remain uninterrupted on the long term and tensions between the US and China are never a good sign,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen in e-mailed comments.
Elsewhere, oilfield services giant Schlumberger (NYSE:SLB) became the latest company to issue a bleak outlook for the U.S. shale industry, leading the company to cut its workforce to an eleven-year low. The company’s North American sales were down 60% from a year earlier.
A Reuters report suggested that shale companies had revived at most one-third of the 2 million barrels a day they shut in during the last four months, and much of that may now fade quickly, given the short life cycle of many wells. In addition, Reuters noted that the U.S. has lost around 200,000 barrels a day of output from ageing ‘stripper wells’.
“The shut-ins have been dramatic, and some may be permanent,” the agency quoted Patrick Montalban, a Montana producer and treasurer of the National Stripper Well Association, as saying.
Baker Hughes will release its weekly rig count data later in the day. The number of active rigs has fallen by three-quarters since March to its lowest level since the start of the shale boom over a decade ago. However, the count has only fallen by three in the last three weeks, suggesting that activity has bottomed out.