Oil Turns Higher as U.S. Drilling Rigs Pullback Shows Restraint
(Bloomberg) -- Oil prices turned higher on Thursday after a report showed a drop in U.S. drilling activity.
Futures in New York erased an earlier loss to cap a seventh straight weekly gain for the holiday-shortened week, the longest winning streak since May 2015. Oil explorers curtailed activity in U.S. fields for the first time this month, bowing to investor calls for restraint. That offset concerns about the economy after a surprise drop in a gauge of private-sector activity in the euro-area and lower-than-expected factory orders in Germany.
Oil has climbed about 40 percent this year as the Organization of Petroleum Exporting Countries and allied producers curbed output. But uncertainty about the coalition’s ability to sustain output cuts and the impacts of U.S. sanctions on Iran have muddied the outlook, even as fighting in Libya adds to supply threats. A surge in U.S. shale production has also hung over the rally.
“We are still calling for a little bit of an overshoot towards the $67 a barrel level,” said Daniel Ghali, a TD Securities strategist. “But that’s really not necessarily sustainable on a longer-term basis as OPEC might want to reconsider the over-compliance to their pledge.”
WTI for May delivery rose 24 cents to $64 a barrel on the New York Mercantile Exchange, edging 0.2 percent higher for the week. London-traded Brent futures closed 35 cent higher, at $71.97.
Oil markets in New York and London will be shuttered Friday ahead of the Easter holiday.
May could be a pivotal month for crude markets as the U.S. decides whether to extend waivers allowing some countries to buy Iranian crude. Asian buyers were said to be putting purchases on hold while awaiting a White House decision.
A meeting of OPEC and its allies in Saudi Arabia next month, meanwhile, may provide clues on future production levels.
‘‘I think the rumblings out of Russians about their commitment or lack thereof to the OPEC+ deal this week really weighed on things,’’ said John Kilduff, founding partner at Again Capital. ‘‘They see the prices carrying a bit too far for their liking and they are also getting increasingly bothered by U.S. market penetration into the Asia region specifically.’’
|Other oil-market news:|
©2019 Bloomberg L.P.