3 Min Read
NEW YORK (Reuters) - Oil prices rose for the second straight day on Friday, supported by a rally on Wall Street and a lower U.S. rig count, although the decline in drilling was the smallest in four weeks and not particularly exciting to traders.
Crude futures posted stronger gains for the week. Optimism in recent days about lower stockpiles at the Cushing, Oklahoma, delivery point for U.S. crude overshadowed data on inventory builds in U.S. gasoline.
Still, some traders and analysts expressed doubt that oil would continue trading higher in the coming weeks due to mixed outlooks for supply and demand and for the global economy.
"I'm predicting a return to the low $40 levels or even below by next month," said Tariq Zahir, a trader in crude oil spreads at Tyche Advisors in Laurel Hollow, New York.
"As U.S. refinery maintenance kicks into full gear, we're going to start seeing inventory builds instead of draws," Zahir said.
Brent, the global benchmark for oil, settled up 43 cents, or 0.9 percent, at $48.60 a barrel. It rose almost $1 at the session high, riding the coattails of the U.S. equities rally, then turned negative for a good part of the day before rebounding. [.N]
U.S. crude settled up 79 cents, or 1.8 percent, at $45.70.
For the week, both Brent and U.S. crude were up about 2 percent.
The latest weekly reading on the U.S. oil rig count from industry firm Baker Hughes showed a drop of four, the smallest decline in four weeks. A lower rig count is usually a bullish signal for oil as it suggests lower production in the future. [RIG/U]
"We've had these rig declines for a while," said Jamie Brunn, managing director at Forecast Trading Group in Suffern, New York. "They've only been mildly supportive to the market, and the impact gets smaller as the number dwindles."
Oil prices have swung wildly over the past month, moving as much as 8 percent in either direction, as signs of record pumping by members of the Organization of the Petroleum Exporting Countries offset expectations for lower U.S. production.
A weakening economy in China, the engine of commodities demand for more than a decade, also curbed bullish sentiment from steady U.S. growth and the rebound in Wall Street stocks. Adding to trader caution are concerns that U.S. interest rates are set to rise by year-end.
Additional reporting by Dmitry Zhdannikov Simon Falush; Editing by Bernadette Baum and Lisa Von Ahn