Oil market likely to remain under external factors' influence

Oil prices remain highly prone to fluctuation. Following their massive losses on Friday, they have risen by around 1.5% again today despite weaker equity markets. 

"In the absence of any clear trend, the oil market is likely to remain under the influence of external factors such as the equity and foreign exchange markets, and to remain volatile", says Commerzbank. 

Nonetheless, the incipient decline of production in the US in particular will herald in a long-term and fundamental bottoming out process on the oil market. On Friday, Baker Hughes reported a further decrease in the oil rig count in the US. Now "only" 644 oil rigs are still active in the US, which is 57% less than at the end of December. 

The low oil prices are taking their toll, the main shale oil producing regions in particular likely to suffer lasting damage. Only 67 oil rigs are currently in operation in North Dakota, the last time the figure was this low was at the end of 2009. Just a year ago, there were 189 active oil rigs there. 

The decline is even more dramatic in Texas, the state which in June still accounted for over 37% of total US oil production: only 365 of the more than 900 oil rigs which were in operation there a year ago are still active. 

"The decrease in US oil production will pick up pace in the near future, for one thing, hedging deals agreed at higher oil prices are expiring, while for another the low chances of the environment improving in anything like the near future are likely to prompt creditors to pull the ripcord", added Societe Generale. 

At the latest when Samson Resources filed for bankruptcy last week it must have become clear to anyone that it is not only the smaller producers who are being hit hard by the crisis.