Oil tops $60 for first time in 2015; oversupply persists

Fri Feb 13, 2015 6:25pm EST
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By Barani Krishnan

NEW YORK (Reuters) - Oil closed up for a second straight week on Friday after another drop in the U.S. rig count, and Brent crude hit a 2015 high above $60 a barrel, but market skeptics cautioned the rally could fade because supplies keep coming.

Many traders and analysts believe there is a global oversupply of nearly two million barrels per day of crude oil.They say little has changed fundamentally to explain the price rebound of the past two weeks.

The number of oil drilling rigs in the United States fell this week to its lowest since August 2011, data showed on Friday. But the market's reaction was relatively tepid compared with the past two weeks when prices spiked on declining rig counts.

"I think people are starting to understand to a certain point that, even if rig counts go down, it's not going to affect production in the short term. It's going to take a few months for that to happen," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York.

U.S. crude inventories have swelled to record highs of nearly 418 million barrels, government data showed last week.

Brent settled the session up $2.24, or nearly 4 percent, at $61.52 a barrel. It rose a 6 percent on the week and 15 percent month-to-date. Brent's gains increased this week after its front-month contract switched on Thursday at a premium.

U.S. crude CLc1 finished $1.57, or 3 percent, higher at $52.78 a barrel.

Oil prices more than halved between June and January as a global glut pushed Brent from a summer peak above $115 to a near six-year low under $46.   Continued...

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson