Oil price set for third weekly gain as investors eye falling output

London: Oil is poised for a third weekly advance as declining US crude production provided more evidence that the market is rebalancing.
Futures gained 1.4 per cent in New York, bringing this week’s gains to 8.5 per cent. Production in Colombia fell last month, while output in the US dropped for a sixth week. The potential for more talks between Opec members and other producers about a production freeze re-emerged at a conference in Paris on Thursday, even after the failure to reach an agreement in Doha last Sunday.
"Investors are still looking at the output reductions in the high-cost world,” Axel Herlinghaus, senior commodities analyst at DZ Bank, said by e-mail. They will also look at the latest US rig-drilling figures, due to be published later on Friday, which could drop to 340 in the coming weeks from 351 reported by Baker Hughes Inc. on April 15, he said. That’s down from 1,482 at the start of 2015.
The International Energy Agency (IEA) reiterated on Thursday it expects non-Opec output to decline by about 700,000 barrels a day this year, which would be the sharpest drop in a quarter century. Production in the US fell to 8.95 million barrels a day, the US Department of Energy said on Wednesday. Output in Colombia fell four per cent in March to 916,000 barrels a day, according to the mines and energy ministry.
West Texas Intermediate (WTI) for June delivery rose as much as 80 cents to $43.98 a barrel on the New York Mercantile Exchange and traded at $43.78 by 8:59am local time. The contract fell $1 to close at $43.18 a barrel on Thursday. Total volume traded was about eight per cent below the 100-day average.
Output talks
Brent crude for June settlement rose 1.1 per cent to $45.01 a barrel on the London-based ICE Futures Europe exchange, bringing its weekly gain to 4.5 per cent. Prices fell 2.8 per cent to $44.53 on Thursday. The global benchmark traded at a $1.34 premium to WTI.
The lows of the first quarter are "likely behind us,” Goldman Sachs Group Inc. said in a note dated April 22.
The door is still open for cooperation between oil producers and an accord will be discussed at the next meeting of the Organisation of Petroleum Exporting Countries (Opec) in June, Ibrahim Al Muhanna, a Saudi oil ministry adviser, said on Thursday at a conference in Paris.