Oil price futures rose on Friday to end the week up 2.1% as the number of oil rigs working in the US fell for the 10th straight week.
West Texas Type crude March futures rose $US1.57, or 3.1%, to settle at $US52.78 a barrel in New York.
In London Brent crude hit a 2015 high above $US60 a barrel on hopes the falling rig county would be followed by a downturn in US oil production.
Analysts warn that won’t necessary follow and US production growth might slow, but won’t fall for some months.
In fact they expect this sort of price volatility to continue for the next few months as the market searches for a bottom. With Opec not meeting till mid year we could see more wild swings up and down on every bit of news or statistics.
This week, for example, sees a number of major players in the US shale sector reporting the latest financial results – the question is whether they cut, and by how much, and what they cut – actual drilling, planned drilling, or just reduce their pace of drilling and development.
US crude inventories have risen to record highs of nearly 418 million barrels, according to the US government, the highest for 80 years for the current late winter period.
Analysts say these high stocks will continue for some time – but watch for a price surge when one week’s figure is reported as being less than the week before.
The number of oil drilling rigs in the US fell last week to its lowest since August 2011, according to services group Baker Hughes, which has been running the survey since 1987.
There were 1,056 rigs drilling for oil in the US, according to Baker Hughes, down 84 in a week. The fall was the same as the week before.
Before the release of the report, Brent crude prices jumped 3.6% to $US61.39 a barrel, while West Texas prices, the main US indicator, gained 3.4% to $US52.96 a barrel.
But both then eased and Brent crude futures settled the session up $US2.24, or nearly 4%, at $US61.52 a barrel – its highest close this year. It rose 6% last week and is up 15% so far this month.
US crude finished at $US52.78 a barrel, and then drifted lower to $US52.65 in limited after hours trading.
Meanwhile the eurozone finance ministers meeting resumes tonight with hopes that Greece will strike a deal – so gold investors will be watching developments closely.
Tensions over Greek attempts to renegotiate its bailout have been upsetting markets, but that then changes as the problems seemingly ease.
The question for markets, especially gold, is whether we will see a repeat of that tonight?
The limited trading in the US will take liquidity out of the market (and others) meaning gold could be subject to some wild swings if there’s a breakdown in the talks, which seems possible, even though there has been plenty of talk of a deal.
Comex gold futures in New York rose on Friday to trim the week’s loss of 0.6%, adding $US6.40, or 0.5%, to settle at $US1,227.10 an ounce in New York.
Comex March silver jumped 50c, or 3%, to end at $US17.294 an ounce, for a weekly gain of around 3.6%.
And Comex copper for March ended little changed at $US2.605 a pound.
