Signs point upward for oil prices

The oil industry found more hopeful signs as crude inventories fell, prices rose and the rig count resumed its climb ahead of OPEC’s meeting later this week.

OPEC and its allies are considering extending their output cuts through next year as oil markets seem to be making progress in draining the oil glut that has lingered for more than three years. In the United States, crude inventories fell by nearly 2 million barrels as oil exports picked up and refineries churned oil into gasoline for the busy holiday driving season.

Demand also is climbing. October saw the strongest U..S. gasoline demand for the month since 2006, the U.S. Energy Department said. Over the past four weeks, gasoline consumption rose nearly 3 percent from the same period a year ago.

Oil has rallied this month amid speculation that the Organization of the Petroleum Exporting Countries will prolong supply cuts when they meet Thursday in Vienna. Prices have risen to two-year highs, closing up 93 cents Friday at $58.95 a barrel in New York.

Drillers, meanwhile, are responding to higher prices by putting more rigs into operation. U.S. oil and gas drilling activity increased for the third straight week, demonstrating new momentum for the sector.

Nine more rigs to drill for oil were added throughout the country last week, bringing the total to 747, up nearly 60 percent from 474 a year earlier. West Texas’ Permian Basin now accounts for 393 rigs, more than half of all the nation’s oil rigs. The next most active area is Oklahoma’s Cana-Woodford shale, with 73 rigs, recently surpassing Texas’ Eagle Ford Shale, with 67 rigs.