Oil advanced on signs that producers are investing less in drilling, which could take a bigger bite out of falling U.S. crude production.
Explorers idled oil rigs for a third straight week in the U.S., Baker Hughes Inc. said Friday. U.S. crude output has fallen for six weeks as the price slump over the past year takes its toll on the shale-oil industry. About $1.5 trillion of potential investment in new oil projects isn’t viable with prices at $50 a barrel, according to consultant Wood Mackenzie Ltd.
Oil is down about 50 percent from a year ago in New York amid a global oversupply that Goldman Sachs Group Inc. predicts may keep prices low for the next 15 years. WTI’s discount to Brent oil traded in London slipped to the narrowest since January last week, signaling that the global supply glut is expanding while it’s shrinking in the U.S.
West Texas Intermediate for October delivery which expires Tuesday, rose $2, or 4.5 percent, to settle at $46.68 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 28 percent below the 100-day average. The more active November contract increased $1.94 to $46.96.
Brent for November settlement advanced $1.45, or 3 percent, to close at $48.92 a barrel on the London-based ICE Futures Europe exchange. The North Sea oil ended the session $1.96 higher than November WTI.
The European crude has weakened relative to WTI as shipments from Nigeria and Angola — which are priced using Brent — reach their highest since 2008, Miswin Mahesh and Michael Cohen, analysts at Barclays Plc., said in a report on Monday. North Sea exports are forecast to climb next month.
Source : Bloomberg