Oil advanced as Abu Dhabi forecast prices could climb as high as $60 a barrel amid a glut that’s shrunk quicker than projected.
Futures rose as much as 1.1 percent in New York and 0.9 percent in London. The global surplus is down to 1.2 million to 1.5 million barrels a day and has contracted faster than expected, Ali Majed Al Mansoori, chairman of Abu Dhabi Department of Economic Development, said in a Bloomberg television interview. U.S. drilling increased from the lowest level in more than six years, according to data from Baker Hughes Inc. on Friday.
Oil has surged about 85 percent from a 12-year low earlier this year on disruptions and falling U.S. output under pressure from the Organization of Petroleum Exporting Countries’ policy of sustaining production. Members of the group rejected a proposal to adopt a new output ceiling last week, with outgoing Secretary-General Abdalla El-Badri saying that it’s difficult to find a target as Iranian supply rises and significant Libyan volumes are halted.
“At the moment, there does seem to be steady support above the $45 level,” Angus Nicholson, a markets analyst in Melbourne at IG Ltd., said by phone. “The biggest concern for prices going forward is whether the rig count will continue to pick up over the next few weeks.”
West Texas Intermediate for July delivery gained as much as 54 cents to $49.16 a barrel on the New York Mercantile Exchange and was at $49 at 2:09 p.m. Hong Kong time. The contract slid 55 cents to $48.62 on Friday, capping a 1.4 percent weekly decline. Total volume traded was about 46 percent below the 100-day average.
Oil Recovery
Brent for August settlement increased as much as 46 cents to $50.10 a barrel on the London-based ICE Futures Europe exchange. Prices slipped 40 cents to close at $49.64 on Friday. The global benchmark crude was at a 47-cent premium to WTI for August.
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The market recovery is on track and a price range of $55 to $60 is possible this year, Mansoori said. Abu Dhabi controls most of the oil reserves in the United Arab Emirates, OPEC’s fourth-largest producer. The U.A.E. holds about 6 percent of world crude deposits.
Oil-market news:
Speculators cut their total long and short positions on WTI crude to the lowest since January 2015 before the June 2 OPEC meeting, according to Commodity Futures Trading Commission. Saudi Arabia raised pricing on most oil grades for sale to Asia and the U.S. in July after the nation’s energy minister said demand was robust.
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