Oil Futures Settle Higher
NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled higher amid pre-weekend short-covering prompted by industry data showing a big drop in the number of active oil rigs in the United States, with lingering geopolitical risks adding to oil's upside.
The number of oil rigs operating in the U.S. fell by seven this week to 736, the lowest level in more than four months, oil services firm Baker Hughes reported this afternoon.
This is the third consecutive weekly drop in the rig count and the report boosted sentiment, especially as it came on the heels of Wednesday's data from the Energy Information Administration showing domestic crude oil production fell about 1.0 million bpd last week to 8.406 million bpd. Total commercial petroleum inventories fell 8.7 million bbl last week, the report added.
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"The fundamentals are bullish and getting better," said analyst Phil Flynn at Price Futures. "The rigs report was particularly bullish and I think we are seeing a pull back by shale players. That explains why the EIA data showed a big drop in crude production."
Earlier in the session, oil futures fell in overnight trade, with West Texas Intermediate crude and Brent crude on the Intercontinental Exchange trading to near one-week lows amid easing fear about supply disruptions in Iraq.
Iraqi oil ministry in Baghdad said today that they expect to restart oilfields in the Kurdistan region on Sunday after shutting for several days. Iraqi troops took control of two major oilfields near Kirkuk from Kurdish Peshmerga forces early this week and shut down some of the oil production on Tuesday.
The flow of oil via a pipeline from Kirkuk to the export terminal in Ceyhan, Turkey, remained low at 200,000 bpd for the third straight day this morning, less than half the 500,000 bpd pipeline capacity, said port agents.
Traders also squared positions ahead of the expiration of the November NYMEX WTI crude contract at the 2:30 p.m. EDT close of regular trade, with the December contract trading at premium to November WTI futures.
NYMEX November WTI expired 18cts higher at $51.47 bbl and at a 37cts discount to the December WTI contract that settled up 33cts at $51.84 bbl. ICE December Brent crude futures settled 52cts higher at $57.75 bbl, settling at a $6.28 bbl premium to WTI.
NYMEX November ULSD futures settled 2.85cts higher at $1.8052 gallon and up 0.82cts for the week. November RBOB futures rose 3.34cts to $1.6781 gallon at settlement, up 5.59cts or 3.4% for the week.
George Orwel can be reached at george.orwel@dtn.com,
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