Oil shook off some of the fears that had rattled the market to extend gains above $62 a barrel as the dollar weakened and global equities rebounded from a rout.
Futures rose as much as 1.4 percent in New York after advancing 4.2 percent last week, propped up by a relief rally that helped U.S. equities cap their best week in five years. Gains were also driven by a weaker greenback, which boosts the allure of commodities priced in dollars. U.S. drillers lifted the number of rigs exploring for oil to the highest since April 2015, though only 51 rigs have been added so far in 2018, down from 72 a year earlier.
Crude has clawed back some of its losses following a risk-asset rout earlier this month, but it’s still struggling to recover to its recent high in January as concerns continue to loom over a resurgence in U.S. output. Meanwhile, OPEC and its allies including Russia are looking at ways to “ institutionalize” their cooperation beyond the end of a supply-cut deal later this year, according to the United Arab Emirates.
“Prices are likely to continue their recovery as fundamentals will strengthen in coming months,” said Jan Edelmann, an analyst at HSH Nordbank AG in Hamburg. “We now see an excellent opportunity for investors to enter the market.”
West Texas Intermediate for March delivery rose as much as 86 cents to $62.54 a barrel on the New York Mercantile Exchange, and was at $62.18 at 10:29 a.m. in London. Prices climbed $2.48 to $61.68 last week, after plunging almost 10 percent a week earlier. Transactions on Monday will be booked Tuesday for settlement purposes because of the U.S. Presidents’ Day holiday. Total volume traded was about 15 percent above the 100-day average.
Brent for April settlement added 36 cents to $65.20 a barrel on the London-based ICE Futures Europe exchange. The contract rose $2.05, or 3.3 percent, to $64.84 last week. The global benchmark traded at a $3.11 premium to April WTI.
The Bloomberg Dollar Spot Index, a gauge of the currency against 10 major peers, dropped 1.3 percent last week, almost erasing gains over the previous two weeks. In equity markets, the S&P 500 Index and the Dow Jones Industrial Average both ended last week up by more than 4 percent.
Working rigs drilling for American crude rose by seven last week, bringing the total to 798, according to Baker Hughes. The Permian basin, located in West Texas and southeastern New Mexico, is forecast to pump a record 2.99 million barrels a day next month. If the shale region were a member of the Organization of Petroleum Exporting Countries, it would be the group’s fourth-largest producer.
Oil-market news:
Gasoline futures rose 0.5 percent to $1.7604 a gallon after gaining 3 percent last week, the first weekly advance this month. Hedge funds cut bets on rising WTI crude prices by the most since October as U.S. shale producers show no signs of slowing.
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