U.S. West Texas Intermediate and international-benchmark Brent crude oil finished higher last week, drawing support from a steep drop in Iraqi crude exports due to tensions in the Kurdistan region. However, weak U.S. demand helped limit gains.

December West Texas Intermediate Crude Oil settled at $51.84, up $0.11 or +0.21% and January Brent Crude Oil finished the week at $57.58, up $0.63 or +1.11%.

According to a shipping source, oil exports from Iraq’s Kurdistan towards the Turkish port of Ceyhan were flowing at average rates on Friday of 216,000 barrels per day versus the usual flows of 600,000 bpd.

It was also reported on Friday that Russia’s biggest oil company, Rosneft, has agreed to take control of Iraqi Kurdistan’s main oil pipeline in $1.8 billion investment. This news likely means Baghdad will have a hard time shutting down these oil flows.

In other news, the U.S. oil rig count fell for a third week in a row, extending a two-month drilling decline, although producers have sharply ramped up bets against a fall in oil prices, which could spur another investment surge.

According to General Electric Company’s Baker Hughes energy services firm, the oil rig could fell seven to 736 in the week to October 20, the lowest level since June.

Earlier in the week, the U.S. Energy Information Administration said U.S. commercial crude oil inventories decreased 5.7 million barrels during the week-ending October 13. Gasoline and distillate inventories rose.

Total products supplied over the last four-week period averaged over 19.9 million barrels per day, down 0.7% from the same period last year.

U.S. crude imports averaged 7.5 million barrels per day the previous week, down by 134,000 barrels per day from the week-ending October 6.

U.S. crude oil refinery inputs averaged over 15.4 million barrels per day during the week-ending October 13, 819,000 barrels per day less than the previous week’s average.

Forecast

The theme in the crude oil markets continues to center around rebalancing. The markets are currently being supported by the notion that the current production cuts from OPEC and other major producers are moving crude oil toward rebalancing. However, the market has become rangebound because I believe investors are waiting for a boost before committing aggressively to the long side. In the meantime, this is likely to mean a sideways market.

The news that bullish oil traders are waiting for is the announcement of an extension of the OPEC-led plan to cut output. Even more bullish for prices would be the announcement of a deepening of those production cuts.