NEW YORK: Oil rose for a second day after the number of rigs drilling in the U.S. slumped to a five-year low, continuing a slowdown in crude production that promises to reduce a global glut.
West Texas Intermediate futures climbed as much as 2.7 percent, adding to Friday’s 1.8 percent gain. The number of active rigs fell by 26 to 614 last week, according to data from oilfield-services company Baker Hughes Inc. U.S. crude output was down 514,000 barrels a day from a four-decade high of 9.61 million in June, data from the Energy Information Administration showed Sept. 30.
Even as U.S. crude stockpiles stay about 100 million barrels above the five-year seasonal average and OPEC pumps above its target, oil has held near $45 a barrel for more than four weeks since plunging to a six-year low near $38 in August. When prices stop responding to bad news it’s usually a sign a rebound is around the corner, investor Jim Rogers said last week.
“We had a strong Friday on the rig count and this is a continuation,” Bob Yawger, director of the futures division at Mizuho Securities USA in New York, said by phone. “Output is already down about 500,000 barrels from its peak and is sure to move lower. Falling production in the States is becoming a major focus.”
WTI for November delivery rose 67 cents, or 1.5 percent, to $46.21 a barrel at 10:52 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 6 percent lower than the 100-day average.
Brent for November settlement advanced $1.05, or 2.2 percent, to $49.18 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a $2.97 premium to WTI.
Rigs targeting oil in the U.S. have fallen for a fifth straight week to a number more than 60 percent lower than a year ago, according to Baker Hughes. Meanwhile, the nation’s production declined by 40,000 barrels a day to 9.1 million through Sept. 25, dropping for a seventh time in eight weeks.
