Oil holds gains

OIL held gains above $58 a barrel as trading resumed following the Christmas holiday and after US explorers refrained from adding rigs for a second week.

Futures were little changed in New York after gaining 2 percent last week. The number of US rigs targeting oil remained unchanged at 747, Baker Hughes data showed Friday. A repair of the North Sea’s Forties Pipeline System is complete and pressure testing has started, operator Ineos Group said Monday. The halt of the line earlier this month sent prices surging.

Oil is heading for a second yearly advance as the Organisation of Petroleum Exporting Countries and its allies including Russia prolong supply curbs through the end of 2018. Iraq’s Oil Minister Jabbar Al-Luaibi said on Monday that he’s optimistic prices will gain next year with global stockpiles falling and demand rising in China and India.

"The expectations of the return of the Forties pipeline may cap some of the upside potential triggered" by the Iraqi oil minister’s comments, Hans van Cleef, a senior energy economist at ABN Amro, said by email.

“I wouldn’t expect much fireworks today as indeed liquidity is low.”

ABN is among the most bullish banks on oil in 2018, according to a Bloomberg survey. Its 2018 forecast for Brent as of November 16 is $70 a barrel, according to data compiled by Bloomberg.

West Texas Intermediate for February delivery was at $58,46 a barrel on the New York Mercantile Exchange, down 3 cents, at 5:54am in New York. Total volume traded was about 68 percent below the 100-day average. The contract on Friday added 11 cents, or 0,2 percent, to $58,47.

Brent for February settlement lost 7 cents to $65,18 a barrel on the London-based ICE Futures Europe exchange. Prices gained 35 cents, or 0,5 percent, to $65,25 Friday. The global benchmark crude traded at a premium of $6,72 to WTI.

Despite a rally in crude prices, this year’s drilling ramp-up has slowed since peaking in August as investors in the oil industry are pushing for returns over growth, a large backlog of drilled wells still needs to be fracked and technology increasingly allows producers to tap more from each hole.

“It’s a bit too early to say whether US rigs will continue to decline as we can’t ignore the fact that it’s winter and some seasonal factors could be stalling drilling activity,” Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone. Bloomberg.