Oil Extends Rally After U.S. Rigs Decline as Iran Risks Persist

Futures added 0.5 percent in New York after capping a third straight quarterly gain, the longest winning streak since 2011. U.S. drillers idled seven working rigs last week, easing concerns over surging shale production. Meanwhile, analysts from Mitsubishi UFJ Financial Group Inc. and UBS Group AG said there are upside risks to oil prices from the potential resumption of sanctions on Iran, which could disrupt the nation’s crude exports.

Crude rebounded over 5 percent last month, recouping February’s losses, after U.S. President Donald Trump named hawkish officials to his government, signaling the nation may pursue a more hard-line stance toward Iran. Even so, concerns persist that a rapid increase in American production, which has topped 10 million barrels a day each week since early February, could undermine efforts by the Organization of the Petroleum Exporting Countries and its allies, which are trying to balance the market by cutting output.

Trump’s position on Iran and declining production from OPEC member Venezuela are causing supply uncertainties that “provide some underlying support for the price,” said Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen. “But the question is whether this is enough to take the prices higher.”

U.S. explorers cut the number of rigs by the most since November 2017 last week, bringing the total to 797, Baker Hughes data showed. Still, the count remains near the highest in three years, and with separate data showing nationwide crude inventories climbed 1.64 million barrels in the week ended March 23, jitters over increasing U.S. supplies remain.
more at:  https://www.bloomberg.com/news/articles/2018-04-02/oil-trades-near-65-as-u-s-drill-rigs-drop-the-most-in-5-months