The number of oil drilling rigs in on operation in the United States fell for the 6th consecutive week from 343 to 332 at the end of last week according to the closely-watched weekly North American Rotary Rig Count report from oil services company, Baker Hughes.

The decline continues as US oil production slowly but surely winds down in the face of pressure from low oil prices brought on by the continuing supply glut and paucity of global demand.

“Production cuts are beginning to feed into the supply/demand balance,” said Monica Freeman, chief markets strategist at Monex BMO Securities. “OPEC seems to be getting its wish in that US oil production is being cut rather than its own as it battles to maintain its market share.”

Despite the failure of the recent summit in Doha, Qatar to reach an agreement to cap oil production, oil prices have held up reasonably well supported initially by a short oil worker strike in Kuwait and signs of moderating US supply.

Iran, OPEC’s 4th largest producer, is expected to remain on course to push production towards 4 million barrels a day while Saudi Arabia says it could ramp up production further in order to exert more pressure on prices and to squeeze US drillers.

Monex BMO Securities says it fully expects the rally in oil prices to runout of steam at around the $50 a barrel level citing the global economic slowdown and the potential for a strengthening in the US dollar in which oil is traded.

About Monex BMO Securities
Monex BMO Securities is a privately held, fully independent investment and wealth management leader, with retail operations based in Toronto, Canada and corporate trading division headquartered in Tokyo, Japan.

From our offices in Toronto the capital city of the province of Ontario and financial and business capital of Canada, we serve private individuals and families from N. America to Europe and with our corporate trading division strategically located in Tokyo, Japan, we have unrivalled access to Asia’s high yielding emerging markets, access to corporate resources, private equity and global mergers and acquisitions.