Oil swung between gains and losses near the lowest closing price in almost four weeks as investors weighed a slowing pace of U.S. drilling-rig reductions against an interest rate cut in China.
Futures in New York rose as much as 0.5 percent and fell as much as 0.4 percent. The number of active machines targeting oil dropped by 1 through Oct. 23 after declining by 45 over the prior three weeks, according to Baker Hughes Inc. China, the world’s second-biggest crude consumer, stepped up monetary easing with its sixth interest-rate cut in a year on Friday to combat deflationary pressures and a slowing economy.
Oil is failing to sustain a rally earlier this month above $50 a barrel as surging U.S. inventories bolstered speculation that a global glut will be prolonged. World crude supplies will remain ample until at least the middle of 2016 while investments in the industry is set to shrink further, International Energy Agency Executive Director Fatih Birol said in Singapore on Monday.
“The recent spate of crude-stockpile builds in the U.S. is reinforcing that story about supply, that story about a saturated market,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “Oil has very strong headwinds to get through.”
West Texas Intermediate for December delivery was at $44.70 a barrel on the New York Mercantile Exchange, up 10 cents, at 4:41 p.m. Sydney time. The contract slid 78 cents to $44.60 on Friday, the lowest close since Sept. 28. The volume of all futures traded was about 44 percent below the 100-day average. Prices have decreased 16 percent this year.
Brent for December settlement was 7 cents higher at $48.06 a barrel on the London-based ICE Futures Europe exchange. Prices lost 4.9 percent last week. The European benchmark crude traded at a premium of $3.38 to WTI.
The U.S. rig count fell to 594, the lowest level since July 2010, Baker Hughes, an oilfield-services provider, said on its website Friday. Drillers have cut the number of active machines by more than 60 percent since December.
Oil at $50 a barrel is a “gift to the world” as prices should be low enough to spur economic growth, according to Ali Al Mansoori, the chairman of the Department of Economic Development in Abu Dhabi.
Crude may climb to $60 by the end of next year, he said in an interview Sunday in the capital of the United Arab Emirates, the fourth-largest producer in the Organization of Petroleum Exporting Countries.