Oil rebounds from 2-week low

Oil prices continued to rise as the US market opened on Monday, within recovery attempts from 2-week low that was hit on Friday, which comes amid prospects that the Saudi output cut will balance the market and offset the expected drop in demand due to the rising Covid-19 infections, but prices are still weighed down by the unexpected build in US oil inventories and drilling rigs.

US crude rose 1.5% to $55.86 a barrel, after opening at $55.06, and hit a low of $55.06, and Brent crude rose 1.4% to $55.96 a barrel, after opening at $55.20, and hit a low of $55.18.

US crude lost around 1.8% on Friday, and hit its 2-week low of $51.46, and Brent crude futures fell 1.7% and hit the lowest level since January 8 of $54.50.

Oil prices rose today thanks to prospects that the Saudi output cut of 1 million bpd in February and March will offset the expected drop in demand due to the rising Covid-19 infections.

The US Energy Information Administration reported on Friday that the crude inventories rose 4.4 million barrels to 482.2 million during the week ending January 15, missing forecasts of a drop by 1.2 million barrels.

Baker Hughes revealed on Friday that the US drilling and exploration rigs rose 2 rigs last week, the ninth straight weekly increase.

The total operating rigs rose to 289, the highest level since the week ending May 8, 2020.

The increase in the US drilling activity boosted the US production by more than 47% since mid-2016 to a total of 13.1 million barrels per day in March 2020, and held recently around 11 million bpd due to the coronavirus pandemic, but the US is still the world's largest oil producer.