Oil extended gains toward $58 a barrel as U.S. drillers targeting crude reduced the rig count for the first time in four weeks. Futures added 0.5 percent in New York after rising 0.5 percent Friday. Shale explorers trimmed the number of rigs by four to 747 last week, according to Baker Hughes data. Hedge funds have boosted bets on rising prices to a record for Brent crude and to near a nine-month high for West Texas Intermediate, exchange and government data showed last week.
Oil is set for a second yearly gain as the Organization of Petroleum Exporting Countries and its allies trim production to drain a global glut. While the group has extended cuts through the end of 2018, it faces rising output from the U.S., which is forecast to surge next year to a record 10 million barrels a day.
“Oil should remain a little bit stronger going into the end of the year,” said David Lennox, a commodity analyst at Fat Prophets in Sydney. “Key things to watch in 2018 are OPEC compliance and better demand across the globe. The only headwind is U.S. production — that’s going to keep the oil price in check.”
WTI for January delivery, which expires Tuesday, rose 30 cents to $57.60 a barrel on the New York Mercantile Exchange as of 2:13 p.m. in Hong Kong. Total volume traded was about 24 percent below the 100-day average. Prices gained 26 cents on Friday, trimming the third weekly loss to 0.1 percent.
Brent for February settlement gained 27 cents to $63.50 a barrel on the London-based ICE Futures Europe exchange. Prices fell 0.3 percent last week. The global benchmark traded at a premium of $5.90 to February WTI.
The Brent net-long position — the difference between bets on a price increase and wagers on a drop — rose 1.8 percent to a record 544,051 contracts, according to data from ICE Futures Europe. Money managers cut their WTI net-long position by 0.4 percent to 390,874 futures and options in the week ended Dec. 12, the U.S. Commodity Futures Trading Commission said Friday.
Sources and photo-credits: Bloomberg