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 U.S. oil drilling increased this week for the first time after 29
weeks of declines, a sign U.S. oil production may start to increase
more strongly again after a slowdown due to a period of low oil
prices.
Oil rigs increased by 12 to 640 following a slump that cut the
number of active U.S. rigs from a peak of 1,609 in October to a
nearly five-year low last week, energy services firm Baker Hughes
Inc <BHI.N> said.
"This is the first weekly increase in 30 weeks and is an indication
that the slump in drilling activity has ended," said Carsten
Fritsch, senior oil analyst at Commerzbank in Frankfurt.
"Oil prices have retreated on that news," Fritsch told Reuters
Global Oil Forum.
Brent crude for August was down 45 cents at $61.62 a barrel by 1020
GMT (0620 EDT), extending a downward trend in place since early May,
which has seen prices fall almost 10 percent.
Front-month U.S. crude was at $56.56, down 37 cents, dropping below
a trading range of $57 to $62 seen since early May.
"The current U.S. horizontal and vertical rig count across the
Permian, Eagle Ford, Bakken and Niobrara shale plays implies that
U.S. oil production growth will reach 135,000 barrels per day (bpd)
year-on-year" by the fourth quarter of 2015, Goldman Sachs said on
Friday.
The rising U.S. rig count adds to near-record production by Russia
and the Organization of the Petroleum Exporting Countries, which is
feeding a huge oversupply.
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OPEC oil supply was at a three-year high due to record or
near-record output from Iraq and Saudi Arabia, a Reuters survey
showed this week. The cartel's production is close to 2.5 million
bpd above demand, filling stocks worldwide.
The Greek economic and debt crisis and concerns over China's
commodities markets weighed on investor sentiment.
Traders said commodity markets were also worried by reports that
China's regulators had opened an investigation into suspected market
manipulation after a slump of more than 20 percent in Chinese stocks
since mid-June.
On Thursday, Shanghai's benchmark composite index fell below 4,000
points for the first time since April - a key support level that
analysts had expected Beijing to defend.
(Additional reporting by Henning Gloystein and Keith Wallis in
Singapore; Editing by Dale Hudson)
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