Oil held gains after rising for an eighth week as U.S. drillers further reduced the number of active rigs to the fewest since September 2010.
Futures were little changed in New York after capping a 0.4 percent weekly advance Friday, the longest run of increases since February 2013. The U.S. rig count declined by 11 to 668, extending a slide that started in December, according to Baker Hughes Inc. The Organization of Petroleum Exporting Countries, which is scheduled to meet June 5, is unlikely to cut its output quota, according to an official at National Iranian Oil Co.
Oil has rebounded from a six-year low in March amid speculation record U.S. output from shale will slow as companies including EOG Resources Inc. reduce exploration. The rally may still falter as the nation’s crude inventories are more than 100 million barrels above the five-year average for this time of year, government data show.
“Supply is the key driver for the market at the moment,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. “If we don’t start seeing some good news in terms of significantly lower production from the U.S., the market might just decide that a bit of caution is appropriate.”
West Texas Intermediate for June delivery was at $59.40 a barrel in electronic trading on the New York Mercantile Exchange, up 1 cent, at 2:55 p.m. Singapore time. The contract climbed 45 cents to $59.39 on Friday. Total volume was about 67 percent below the 100-day average. Prices have gained 12 percent this year.
Brent for June settlement was 12 cents higher at $65.51 a barrel on the London-based ICE Futures Europe exchange. It lost 15 cents to $65.39 on Friday. The European benchmark crude traded at a premium of $6.10 to WTI.
U.S. drillers cut the number of active machines for a 22nd week, Baker Hughes data showed Friday. The rotary-rig count has fallen 58 percent since Dec. 5, according to the oilfield-services company.
Crude stockpiles in the U.S., the world’s biggest oil consumer, dropped to 487 million barrels through May 1 in the first weekly decrease since January, the Energy Information Administration reported May 6. Supplies remained near the highest level since 1930, based on monthly records from the Energy Department’s statistical arm dating back to 1920.
The Chicago Board Options Exchange Crude Oil Volatility Index closed at 35.09 on Friday, the lowest level since Dec. 5. The gauge of hedging costs on the U.S. Oil Fund, the largest exchange-traded fund tracking crude futures, slumped 8 percent, the most since March.
The market is oversupplied by about 2 million barrels a day, Mohsen Ghamsari, National Iranian Oil’s head of international affairs, said in Tehran on May 9. Prices are unlikely to rise above $70 a barrel by 2016, he predicted.
OPEC, which supplies about 40 percent of the world’s oil, agreed at a November meeting to maintain its output target at 30 million barrels a day. The 12-member group has pumped above that level the past 11 months, according to a Bloomberg survey of producers and analysts.
In Yemen, Shiite Houthi rebels accepted a proposal by Saudi Arabia to halt fighting for five days for humanitarian assistance, Saba news agency reported. Saudi Foreign Minister Adel Al-Jubeir announced the proposed cease-fire with U.S. Secretary of State John Kerry in Paris on Friday.
Yemen’s location at the Bab el-Mandeb, a chokepoint in international shipping, makes it important for energy trade, according to the EIA. Closing the waterway would force tankers to sail around the southern tip of Africa to reach Europe and the Americas.