Oil futures settled higher Friday, with gains for the U.S. benchmark intensifying in the last few minutes of trading after a report showing a 26th straight weekly decline in the number of U.S. rigs actively drilling for oil. The news outweighed pressure from the Organization of the Petroleum Exporting Countries’s decision not to change its production ceiling.
On the New York Mercantile Exchange, July crude tacked on $1.13, or 2%, to settle at $59.13 a barrel. It had traded below $57 in the wake of the OPEC decision early Friday. Prices moved decidedly higher after rig-count data came out at around 1 p.m. Eastern. Prices still lost 1.9% for the week, the first weekly loss for a most-active contract since the week ended March 13. July Brent crude the global benchmark trading on London’s ICE Futures exchange, climbed $1.28, or 2.1%, to $63.31, headed for a weekly loss of about 3.4%.
Baker Hughes reported Friday that the number of U.S. rigs actively drilling for oil fell 4 to 642 as of June 5. The market holds out hope that the 26 weeks of oil-rig declines will significantly impact production levels and supplies. “Rig counts were in the rear view mirror,” said Phil Flynn, senior market analyst at Price Futures Group, explaining the last-minute price rally.
Meanwhile, Saudi Arabia’s oil minister Ali al-Naimi said that the oil cartel will maintain its 30 million barrel-a-day production ceiling—a move that was widely expected, but traders have shown concern that the cartel’s decision may mean that the global glut of crude supplies will continue. Also likely supporting prices, al-Naimi “seemed upbeat on the demand side,” said Flynn. “Now there may be more questions about spare capacity as demand comes back.” Oil prices, which had been trading in positive territory, held their ground immediately after the OPEC announcement then traded mostly lower. But most believed OPEC would maintain current production levels as it fights non-OPEC producers to keep its share of the global-oil market. “Leaving production levels as they are does nothing to change fundamentals, yet there will be a lot of talk how the market is facing a changed landscape,” said Darin Newsom, DTN senior analyst.
Based on technical analysis, Newsom said Nymex prices have been in the process of starting a downtrend, testing support at their four-week low of $56.51.