Oil extended gains above $36 a barrel as U.S. drillers reduced the number of active rigs to the least in more than six years amid a global glut.
Futures rose as much as 2.2 percent in New York and crude in London extended its longest rally since November. Rigs targeting oil fell by 8 to 392, declining for an 11th week to the lowest level since December 2009, according to Baker Hughes Inc. Hedge funds unwound bearish bets at the fastest pace in 10 months, U.S. Commodity Futures Trading Commission data showed, as the prospect of prices sinking to $20 faded.
Oil on Friday completed a third week of gains, the longest such run since May, as U.S. crude production slid to the lowest since November 2014. Still, rising stockpiles are keeping supplies at the most in more than eight decades. A meeting among major producers to discuss freezing output may be held in Russia, Doha or Vienna in the March 20 to April 1 period, Russian Energy Minister Alexander Novak said on state television. There is no final decision on timing yet, Novak said.
“We’re starting to see U.S. production levels decline and if that continues, it could easily drive momentum in oil a bit further,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “Still, the higher prices go, the more vulnerable they are to some sort of correction, given we’re moving into a period of seasonal weakness.”
Short Positions
West Texas Intermediate for April delivery added as much as 80 cents to $36.72 a barrel on the New York Mercantile Exchange and was at $36.63 at 12:08 p.m. Hong Kong time. The contract climbed $1.35 to $35.92 on Friday, the highest close since Jan. 5, capping a 9.6 percent advance for the week. Total volume traded was about 48 percent above the 100-day average.
Brent for May settlement increased as much as 78 cents, or 2 percent, to $39.50 a barrel on the London-based ICE Futures Europe exchange. The contract rose for a fifth day on Friday, the longest winning streak since the period to Nov. 25. The global benchmark crude was at a premium of 97 cents to WTI for May.
Speculators reduced their short positions in WTI crude by 15 percent, or 25,639 contracts of futures and options combined, to 150,718 in the week ended March 1, the biggest decline since April 21, according to CFTC data. The exodus of bearish bets resulted in a 24,886-contract jump in the net-long position.
U.S. crude stockpiles rose by 10.4 million barrels to 518 million in the week to Feb. 26, according to the Energy Information Administration. Inventories increased for a third week. Saudi Arabia, Russia, Qatar and Venezuela agreed last month they would freeze production, if other producers followed suit, in an effort to tackle a global oversupply in the oil market.