Oil held gains near $50 a barrel as the US rig count dropped the most since January after a record expansion earlier this year.
Futures were little changed in New York after advancing 5.1 percent last week. Rigs targeting crude fell by seven to 749, according to data Friday from Baker Hughes. Drillers haven’t added any new machines during the past five weeks, capping in August the first monthly drop since May 2016. The third hurricane this month is tracking toward the Caribbean and strengthening along the way.
While oil has rebounded this month and pushed above $50 a barrel last week, prices have struggled to hold at those levels this year as rising US output stifles supply curbs led by members of the Organization of Petroleum Exporting Countries. Insufficient new investment in production is stoking risk of tighter supply, according to the International Energy Agency, which last week raised its 2017 demand growth forecast.
“We’re seeing a little bit of a pause in the market, a wait and see approach after prices climbed to resistance above $50 last week,” said Ric Spooner, an analyst at CMC Markets in Sydney. “There are some signs of an underlying increase in demand and the rig count decline indicates a bit of stabilization.”
West Texas Intermediate for October delivery was at $49.99 a barrel on the New York Mercantile Exchange, up 10 cents, at 7:51 a.m. in London. Total volume traded was about 40 percent below the 100-day average. Prices closed unchanged Friday at $49.89.
Brent for November settlement added 4 cents to $55.66 a barrel on the London-based ICE Futures Europe exchange. Prices rose 3.4 percent last week. The global benchmark crude traded at a premium of $5.14 to November WTI.
The US rig count shrank in all four of the nation’s biggest oil basins last week, with Texas’ Eagle Ford and Permian regions leading the decline, data from Baker Hughes showed. American crude output has averaged about 9.23 million barrels a day this year, according to government data.