Oil posted the longest run of gains in six months on Friday after US shale explorers paused a record drilling expansion in a sign the boom might be slowing down.
Futures added as much as 2.7 percent in New York, advancing for a seventh session.
Shale explorers broke the longest stretch of uninterrupted growth in three decades as US rigs targeting crude fell by two this week, bringing the total to 756, according to Baker Hughes Inc data reported on Friday.
The rig count has more than doubled from a low of 316 in May.
While prices have surged this week, oil in New York and London still losses for last month — a month in which prices typically gain.
Crude futures last week tumbled into a bear market on concerns that rising global supply is offsetting cuts from OPEC and its partners.
Bank of America Corp became the latest in a string of banks to cut its outlook for prices this year and next.
“I don’t think everyone’s quite ready to write off the OPEC/non-OPEC accord just yet,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. “And given how far we’ve fallen, you’re seeing bargain hunting by some.”
West Texas Intermediate (WTI) for August delivery on Friday gained US$1.11 to settle at US$46.04 on the New York Mercantile Exchange, up 7 percent from last week’s US$43.01 per barrel. WTI is down about 9 percent this quarter.
Brent for August settlement, which expired on Friday, closed US$0.50 higher at US$47.92 per barrel on the London-based ICE Futures Europe exchange, up 5 percent from last week’s US$45.54 per barrel.
The global benchmark is down about 9 percent this quarter and traded at a premium of US$1.85 to WTI.
The rig count drop follows a report on Wednesday that US crude output fell by the most in almost a year last week amid field maintenance in Alaska and tropical storm Cindy, while gasoline inventories fell for a second week.
OPEC and its partners are not worried about the market recovery and do not plan to discuss deeper cuts, United Arab Emirates Minister of Energy Suhail al-Mazrouei said.
“There is cause to be confident that the long-awaited oil market rebalancing is fast approaching,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd in London. “Doubts will linger over the staying power of this rally” and “several stumbling blocks still lie ahead of the price recovery.”
Bank of America lowered its WTI forecast for this year to US$47 and next year to US$50, citing a continuing rise in oil output and disappointing demand.
Prices are to remain in contango, where near-term contracts are cheaper than long-dated ones, until year-end, the bank said.
Futures will only move into backwardation — the inverse market structure that is desired by OPEC — by next summer, it said.
Oil market news:
‧ Increased demand in the third and fourth quarters will help to rebalance the market, al-Mazrouei said on Thursday.
‧ Libyan output is to increase to almost 1 million barrels per day in the next few days, according to a person with knowledge of the matter, who asked not to be identified.
‧ Goldman Sachs analysts might not be the only ones to have incorrectly called commodity prices this year, but they are at least trying to figure out how they misjudged the market.
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