Oil Caps Fourth Weekly Gain as U.S. Fuel Demand Strengthensby and
IEA says prices have bottomed as shrinking supplies erode glut
Non-OPEC supply will decline 750,000 b/d as U.S. falters: IEA
Oil capped the longest run of weekly gains since May amid signs of rising U.S. fuel demand and slowing crude production.
Futures climbed 1.7 percent in New York, ending with a fourth weekly advance. Gasoline consumption in the past four weeks was at the highest since September, while crude output remained near the lowest since November 2014, according to data from the Energy Information Administration Wednesday. Prices may have bottomed as shrinking supplies erode a global glut, the International Energy Agency said.
"Gasoline demand is strengthening," said Harry Tchilinguirian, BNP Paribas SA’s London-based head of commodity markets strategy. "Those market participants that placed bearish bets will take the opportunity of this rally to close their positions, thus adding to recent upward momentum in price."
Oil has recouped its losses this year after slumping to a 12-year low last month amid speculation stronger demand and falling U.S. production will ease a supply glut. Shale drillers are struggling with prices that are still 65 percent down from a 2014 peak. Anadarko Petroleum Corp. was the latest to announce job cuts, laying off about 1,000 workers together with plans to park drilling rigs, slash dividends and sell assets.
West Texas Intermediate for April delivery added 66 cents to $38.50 a barrel on the New York Mercantile Exchange. Prices increased 7.2 percent this week. Total volume traded was about 25 percent above the 100-day average.
Brent for May settlement climbed 34 cents to $40.39 a barrel on the London-based ICE Futures Europe exchange. Prices rose 4.2 percent this week for a third weekly advance. The global benchmark crude was at a premium of 30 cents to WTI for May.
U.S. gasoline demand averaged 9.33 million barrels a day during the past four weeks, according to EIA data. Supplies of the fuel slid to 250.5 million barrels last week. Nationwide crude stockpiles rose by 3.9 million barrels to 521.9 million.
Production outside the Organization of Petroleum Exporting Countries will decline by 750,000 barrels a day this year, or 150,000 barrels a day more than estimated last month, the IEA said Friday. Markets are also being supported by output losses in Iraq and Nigeria, and as Iran restores production more slowly than planned following the end of international sanctions, it said.
Low prices continue to impact companies:
- Anadarko joins U.S. shale drillers from Devon Energy Corp. to Chesapeake Energy Corp. in reducing jobs and spending to weather the energy rout.
- BP Plc plans to cut the number of active oil rigs in Alaska’s Prudhoe Bay to two from five this year.
- Mexican oil service provider Cotemar will cut up to 2,000 jobs after Pemex canceled two contracts amid budget cuts.