Oil rallies above $65 on US drilling cut
seoul — Oil’s rally above $65 a barrel is being propelled by a sign that American explorers have curtailed drilling activity as well as speculation that the US could reimpose sanctions on Opec producer Iran.
Futures added 0.5 per cent in New York after capping a third straight quarterly gain, the longest winning streak since 2011. US drillers idled seven working rigs last week, easing concerns over surging shale production. Meanwhile, analysts from Mitsubishi UFJ Financial Group Inc. and UBS Group AG said there are upside risks to oil prices from the potential resumption of sanctions on Iran, which could disrupt the nation’s crude exports.
Crude rebounded over 5 per cent last month, recouping February’s losses, after US President Donald Trump named hawkish officials to his government, signaling the nation may pursue a more hard-line stance toward Iran. Even so, concerns persist that a rapid increase in American production, which has topped 10 million barrels a day each week since early February, could undermine efforts by the Organisation of the Petroleum Exporting Countries and its allies, which are trying to balance the market by cutting output.
Trump’s position on Iran and declining production from Opec member Venezuela are causing supply uncertainties that “provide some underlying support for the price,” said Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen. “But the question is whether this is enough to take the prices higher.”
West Texas Intermediate crude for May delivery added 18 cents to $65.12 a barrel on the New York Mercantile Exchange at 2:18 p.m. in Dubai. The contract climbed 56 cents to $64.94 on Thursday. No futures were traded in New York or London on Friday due to the Good Friday holiday. Total volume traded was about 45 per cent below the 100-day average.