Oil pared its fourth monthly decline as U.S. drillers cut the number of active rigs targeting crude to the lowest in more than six years amid a global glut.
Futures in New York rose as much as 1 percent. The rig count fell by 13 to 400, the lowest since December 2009, according to Baker Hughes Inc. That’s the 10th week of declines. Hedge funds and other speculators increased net-long positions in West Texas Intermediate futures and options to the highest level since November, U.S. Commodity Futures Trading Commission data show.
Oil is still set for the longest run of monthly losses in more than a year on speculation a worldwide surplus will be prolonged amid increased exports from Iran and U.S. stockpiles that are at the highest in more than eight decades. A proposal to freeze output by Saudi Arabia and Russia is achievable and prices my rise to as high as $50 a barrel by the end of the year, Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu told CNBC.
“Oil has been quite stable above $30,” said Angus Nicholson, an analyst at IG Ltd. in Melbourne. “There isn’t a strong case for prices to rally too much further, but perhaps the worst of the selloff is done. Any major commitments from Iran seem pretty unlikely when it comes to the freeze proposal.”
WTI for April delivery gained as much as 34 cents to $33.12 a barrel on the New York Mercantile Exchange and was at $32.89 at 12:56 p.m. Hong Kong time. The contract lost 29 cents to close at $32.78 on Friday. Total volume traded was about 4 percent above the 100-day average. Prices rose 11 percent last week, the most since August, and have fallen 2.1 percent this month.
Brent for April settlement, which expires Monday, rose as much as 58 cents, or 1.7 percent, to $35.68 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 19 cents to close at $35.10 on Friday. The European benchmark crude was at a premium of $2.61 to WTI. The more-active May contract was up 32 cents at $35.76.
Speculators’ net-long position in WTI rose by 13,385 contracts to 110,554 in the week ended Feb. 23, CFTC data show. Shorts, or bets that prices will decline, slipped 6.7 percent while longs climbed 0.2 percent.
Low prices are affecting oil companies:
Petroleo Brasileiro SA secured a $10 billion loan from the China Development Bank as the state-owned company faces more than double that amount in maturities over the next two years. The loan is part of an agreement to supply crude to China, the Rio de Janeiro-based company said in a filing on Friday.
Italy’s largest producer Eni SpA on Friday reported a fourth-quarter loss even as oil and gas output rose to the highest in five years.
Husky Energy Inc., the producer controlled by Hong Kong billionaire Li Ka-Shing, reported a fourth-quarter loss narrower than the same period a year earlier.