Oil futures erased modest losses Friday to end with gains after data showed the number of U.S. oil rigs remained steady this week. As The Market Watch writes in an article "U.S. oil extends win streak to 4 days as U.S. rig count remains stable", West Texas Intermediate crude for February delivery on the New York Mercantile Exchange rose 11 cents, or 0.2%, to settle at $58.47 a barrel. The U.S. benchmark posted a 2% rise for the week, marking its first weekly gain in three weeks. February Brent crude the global benchmark, rose 35 cents, or 0.5%, to end at $65.25 a barrel, marking a 3.2% weekly advance. Volume was light ahead of the Christmas holiday on Monday.
The gains saw WTI futures extend a win streak to four sessions, while Brent has risen for five straight. Baker Hughes said the number of U.S. oil rigs was unchanged at 747 this week. Traders are keeping an eye on the count amid concerns shale producers could move to ramp up production next year in response to higher prices. That said, it was the shutdown of the Forties Pipeline System in the North Sea that was the main focus for oil traders this week.
The pipeline was shut down last week after operator Ineos discovered a hairline crack in a pipe, stopping the flow of 450,000 barrels of North Sea oil a day. That tightening of supply had buoyed prices over the past week. But Ineos said Thursday it expects to bring pipeline flows “progressively back to normal rates” early in the New Year. “Doing the simple arithmetic, if the pipeline restarts on 1 January, the outage will have resulted in a loss of 8.4 [million barrels] (21 days at 400,000 barrels a day); if the pipeline restarts on 8 January, the outage will be 11.2 Mb (28 days at 400 kb/d). The actual number will depend not only on the dates and the pipeline, but also on the pace of ramp-up of the oil fields themselves,” which doesn’t alwasy go smoothly, said Societe Generale oil analyst Michael Wittner, in a Friday note.
Crude prices have risen more than 20% since September, as a result of renewed geopolitical risk to supply in the Middle East, declining global inventories and OPEC’s ongoing efforts to curb production.
The Organization of the Petroleum Exporting Countries and 10 members outside the cartel, including Russia, agreed late last month to extend a deal to cut crude output by nearly 2% through the end of next year. The original accord was first struck a year ago as part of strategy to rein in the global supply glut and boost prices.
In other energy products, January heating oil rose 1% to $1.9694 a gallon, while January gasoline rose 0.8% to $1.7623 a gallon. Heating oil saw a 3.5% weekly rise, its strongest since the week ending Sept. 1, while gasoline posted a weekly advance of 6.5%, the strongest since late July.
Natural gas rose 2.7% to $2.667 per million British thermal units., for a 2.1% weekly rise.