Oil extends gains as Fed signals flexibility and US rigs drop

OIL is headed for its longest rally in more than 17 months as the US Federal Reserve sought to soothe investor concerns and on signs of slowing American production.

Futures in New York rose as much as 2.1 percent, and are set for the longest winning streak since July 2017. Crude is rising with other risk assets after Fed Chairman Jerome Powell said the central bank could pause interestrate increases if the US economy weakens and reassured the market that he’s listening to its signals. Meanwhile, working oil rigs in the US fell for the first time in three weeks, according to data released Friday by Baker Hughes.

Crude recovered slightly this month after posting its first annual loss since 2015. While Goldman Sachs Group Inc. cut its oil price forecasts for 2019, citing a reemerging glut and resilient American shale output, the bank said a 42-percent drop toward the end of last year was excessive. Volatility persists as the US and China try to negotiate an end to a trade war that risks hurting economic growth, and Organization of the Petroleum Exporting Countries (Opec) and its allies pursue supply curbs.

“The statement from the Fed chair was in the direction of what the market bulls have wanted,” Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone from Seoul. “At the same time, there’s increased expectation that Opec+ will cut its production from this month. The drop in the US rig count is also seen as a bullish factor.”

West Texas Intermediate for February delivery rose as much as 99 cents to $48.95 a barrel on the New York Mercantile Exchange, and traded 92 cents higher at $48.88 a barrel at 7:55 a.m. in London. Prices increased 5.8 percent last week, the most since June 29. Bloomberg News