U.S. crude-oil futures on Friday scored a third straight weekly gain, with prices for the Brent contract marking their highest settlement of the year on the back of spending cuts by oil companies and further declines in the number of active U.S. oil rigs.
On the New York Mercantile Exchange, crude for delivery in March rose $1.57, or 3.1%, to settle at $52.78 a barrel—up about 2.1% for the week.
Prices briefly traded as high as $53.10 immediately after weekly data from Baker Hughes Inc. showed that the U.S. number of rigs actively drilling for oil and natural gas fell 98 to 1,358 as of Feb. 13. That’s down 406 from the same time last year and they were already at about a 5-year low as of the week ended Feb. 6. Brent crude for April delivery rose $2.24, or 3.8%, to settle at $61.52 a barrel on London’s ICE Futures exchange. Based on the most-active contracts, Brent prices haven’t settled above $60 since Dec. 24 and they’re up more than 6% for the week. “The recent bounce back in the price of Brent appears to have been driven by the sharp drop in the number of rigs drilling for oil and the slew of announcements from major oil companies that they are cutting back on investment,” said Tom Pugh, commodities economist at Capital Economics, in a note early Friday.
Apache Corp. on Thursday said it plans to put the brakes on some drilling activities until service costs decline and prices recover.
Company announcements this year indicate that oil companies that account for around 49% of the global oil-and-gas spending budget intend to spend 16% less on exploration and production in 2015, according to Barclays estimates. But Matt Smith, commodity analyst at Schneider Electric, pointed out that although the market is seeing a drop in drilling activity, “the delay in well completions by about 3 to 7 months means production will continue to edge higher into the second quarter, while the rig count continues to drop.”