Don’t be surprised if oil moves to the front of the markets thinking this week – with perhaps something positive for prices after a shocking slide in the weekly number of rigs drilling for oil across the US.
The weekly report from oil services group, Baker Hughes showed the biggest fall in US active rig numbers in three years – a drop of 25 which was also the third weekly fall in a row.
Analysts took that as a sign the slide in prices since September-October (when prices hit four and a half year highs) for US West Texas and the international Brent marker crude, is starting to hit the US fracking sector.
Baker Hughes reported the number of active US rigs drilling for oil dropped by 21 to 852 last week, while the number of rigs looking solely for gas eased by four. That made a total for the week of 1,025 rigs.
That marked a third straight weekly decline and the largest weekly decline since February 2016. The reduction implies a slowdown in future production activity.
The monthly Drilling Productivity report from the US Energy Information Administration (EIA) is due out on Tuesday with forecasts for February US shale production.
Analysts say that could show a dip in expected US output which is now running at record levels.
US production totalled a high 11.9 million barrels a day, according to the EIA’s weekly report. That was up 200,000 barrels in a week (but probably a bit longer as the EIA is now rounding up and down the weekly estimates which do fluctuate noticeably).
US oil stocks fell 2.7 million barrels to just over 437 million barrels last week which was slightly higher than the average for the past five years for the start of the year.
The news from Baker Hughes helped send US oil prices higher on Friday
West Texas Intermediate (WTI) crude for February delivery rose $US1.73, or 3.3%, to settle at $US53.80 a barrel, after losing 0.5% on Thursday in New York.
That helped WTI futures rise 4.3% over the week.
In Europe, March Brent crude rose $US1.52, or 2.5%, to $US62.70 a barrel for a weekly rise of 3.7%.
Meanwhile, Comex gold futures saw their first weekly loss for a month last week.
Gold for February delivery fell $US9.70, or 0.8%, to settle at $US1,282.60 an ounce— off some $11 from the midweek peak of $US1,293.80.
The contract lost about 0.5% for the week, after posting gains in each of the last three weeks. The settlement was the lowest year to date, data from FactSet showed.
Comex March silver fell 13.7 cents, or 0.9%, to $US15.399 ounce. It lost 1.6% for the week.
Comex March copper rose 1.5% to $US2.719 a pound on Friday to be 2.1% higher for the week.
April platinum fell 1.3% to $802.10 an ounce, for at a weekly loss of 1.9%. Palladium futures notched yet another record settlement Thursday—its ninth in 10 sessions. But Friday saw palladium settle at $US1,335.10 an ounce, down about 1%.That saw it enjoy a weekly rise of 4.4%.
