Oil is poised for a third weekly advance as declining U.S. crude production provided more evidence that the market is rebalancing.
Futures gained 1.4% in New York, bringing this week’s gains to 8.5%. Production in Colombia fell last month, while output in the U.S. dropped for a sixth week. The potential for more talks between OPEC members and other producers about aproduction freeze re-emerged at a conference in Paris on Thursday, even after the failure to reach an agreement in Doha last Sunday.
“Investors are still looking at the output reductions in the high-cost world,” Axel Herlinghaus, senior commodities analyst at DZ Bank AG, said by email. They will also look at the latest U.S. rig-drilling figures, due to be published later on Friday, which could drop to 340 in the coming weeks from 351 reported by Baker Hughes Inc. on April 15, he said. That’s down from 1,482 at the start of 2015.
The International Energy Agency reiterated on Thursday it expects non-OPEC output to decline by about 700,000 bpd this year, which would be the sharpest drop in a quarter century. Production in the U.S. fell to 8.95 MMbopd, the U.S. Department of Energy said on Wednesday. Output in Colombia fell 4% in March to 916,000 bpd, according to the mines and energy ministry.
West Texas Intermediate for June delivery rose as much as 80 cents to $43.98/bbl on the New York Mercantile Exchange and traded at $43.78 by 8:59 a.m. local time. The contract fell $1 to close at $43.18/bbl on Thursday. Total volume traded was about 8% below the 100-day average.
Brent crude for June settlement rose 1.1% to $45.01/bbl on the London-based ICE Futures Europe exchange, bringing its weekly gain to 4.5%. Prices fell 2.8% to $44.53 on Thursday. The global benchmark traded at a $1.34 premium to WTI.
The lows of the first quarter are “likely behind us,” Goldman Sachs Group Inc. said in a note dated April 22.
The door is still open for cooperation between oil producers and an accord will be discussed at the next meeting of the Organization of Petroleum Exporting Countries in June, Ibrahim Al-Muhanna, a Saudi oil ministry adviser, said on Thursday at a conference in Paris.