Oil ends up 6 percent on lower shale output bet, equity rally
By Barani Krishnan
NEW YORK (Reuters) - Oil markets settled up as much as 6 percent on Monday as speculation about falling U.S. shale output and a rally in equities fed the notion that crude prices may be bottoming after a 20-month collapse.
Prices began the week with a rebound in Asian trade, reacting to Friday's U.S. rig count data. The number of oil drilling rigs in operation fell to a December 2009 low after nine straight weeks of cuts. [RIG/U]
Oil got a further boost after the International Energy Agency, the world's oil consumer body, said U.S. shale oil production could fall by 600,000 barrels per day (bpd) this year and another 200,000 bpd in 2017.
IEA executive director Fatih Birol told CERAWeek, an industry gathering in Houston, that crude oil at $80 a barrel would be good for both producers and consumers, although the agency said in a report a strong price rebound was unlikely under present market conditions.
U.S. crude futures CLc1 settled up $1.84, or 6 percent, at $31.48 a barrel, rallying above $32 at one point.
The rally benefited from bids to narrow the discount of the expiring front-month contract in U.S. crude to the second month, traders said. The March CLH6 contract settled almost $2 a barrel lower than April CLJ6, which would be the front-month from Tuesday. On Friday the discount was more than $2.
Futures of Brent LCOc1 finished up $1.68, or 5 percent, at $34.69.