Oil rally continues
In a positive result of Opec and other producers efforts to reduce oil inventories, crude ended the week with a gain after breaching a key $70 threshold and rallying for five straight days. Last week, investors saw $70 Brent crude for the first time since 2014 and a steady run of diminishing US stockpiles amid healthy demand.
new york — Crude ended the week with a gain after breaching a key $70 threshold and rallying for five straight days.
Futures rose in New York and London, with both benchmarks closing out the biggest weekly gains since October. Last week, investors saw $70 Brent crude for the first time since 2014 and a steady run of diminishing US crude stockpiles amid healthy demand. Yet doubts linger that a strong price rally above that key level will persist with expanding US output and a rising rig count.
“Opec’s still doing good on their compliance and consumption is growing. They are getting the inventory drops they have been looking for,” James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said. Yet, “the price is getting good and with the pop in rig count again, we are going to see a lot more completions in the Permian Basin.”
The US oil rig count climbed by 10 to 752, according to Baker Hughes data released on Friday.
Oil posted a 4.7 per cent gain in New York and 3.3 per cent rise in London for the week as the Organisation of Petroleum Exporting Countries and its allies trim output and US inventories shrink. Still, Russian Energy Minister Alexander Novak told reporters on Friday that producers involved in the supply reduction deal regularly discuss options for winding down the effort. While a committee of oil ministers will discuss the matter in Oman on January 21, it’s not the main goal of the meeting, he said. As Brent hovers near $70, “it has to put pressure on Opec to rethink their production cuts and certainly more US production is economically viable,” Rob Haworth, who helps oversee $150 billion in assets at US Bank Wealth Management in Seattle, said. “This is a market that could certainly use a pause.”
WTI for February delivery rose 50 cents to settle at $64.30 a barrel on the New York Mercantile Exchange, the highest level since December 2014. Total volume traded was about 15 per cent above the 100-day average.
Brent for March settlement climbed 61 cents to end the session at $69.87 a barrel on the London-based ICE Futures Europe exchange after rising above the $70 a barrel threshold on Thursday for the first time in three years.