Oil traded above $61 a barrel as signs of slowing U.S. drilling added to optimism that the global crude surplus is abating.
Futures were little changed in New York following a 1.7 percent increase lastweek. Working rigs drilling for crude fell by five in the seven days ended Jan.5, bringing the total to 742, according to Baker Hughes data reported Friday,when prices slid 0.9 percent. Meanwhile, hedge funds retreated from the mostbullish stance on West Texas Intermediate oil in 10 months during the weekended Jan. 2.
Oil had its strongest opening week for any year since 2013 last week as U.S. stockpiles continued to shrink and amid output curbs by the the Organization of Petroleum Exporting Countries and its allies. The recent strength in crude has spurred speculation that American shale producers may be encouraged to expand drilling to take advantage of rising prices, countering the effect of cuts by OPEC and its partners.
“Softer prices on Friday suggest traders are looking beyond the latest rig count and eyeing the odds that current prices will induce a production response over coming months,” said Ric Spooner, a Sydney-based analyst at CMC Markets. “The WTI price is currently testing chart resistance represented by the May and June 2015 peaks. How the market handles this may set the tone for the near term trend.”
WTI for February delivery was at $61.51 a barrel on the New York Mercantile Exchange, up 7 cents, as of 7:31 a.m. in London. Total volume traded was about 31 percent below the 100-day average. Prices lost 57 cents to $61.44 on Friday.
Brent for March settlement added 1 cent to $67.63 a barrel on the London-based ICE Futures Europe exchange. Front-month prices rose about 1.1 percent last week. The global benchmark crude traded at a premium of $6.18 to March WTI.
U.S. explorers spent the final six weeks of 2017 in a virtual standstill, adding just as many rigs as they laid off. Bowing to heightened investor pressure, drillers are seeking to do more with less in a bid to boost profits. Their money-saving moves include opening already-drilled wells by fracking them rather than deploying more rigs to start new ones.
Money managers cut their WTI net-long position — the difference between bets on a price increase and wagers on a drop — by 3.8 percent to 396,381 futures and options in the week ended Jan. 2, according to data from the U.S. Commodity Futures Trading Commission on Friday. Longs fell by 3.8 percent, and shorts fell 4.3 percent.
President Nicolas Maduro on Friday said Venezuela in the coming days will issue 100 million units of an oil-backed cryptocurrency known as the petro, which will be worth the price of one barrel in Venezuela’s oil basket. An Iranian oil tanker sailing to South Korea collided with a cargo ship off China’s coast and caught fire, leaving at least 32 people missing on Sunday.