Oil prices rallied last Friday to register a seventh-straight session gain. New data showed the first decline in the number of active U.S. oil rigs in 24 weeks and fed expectations for further reductions in crude production.
West Texas Intermediate oil on the New York Mercantile Exchange notched its longest run of session climbs since the seven-week stretch ended Aug. 19, 2016.
August WTI crude rose $1.11, or 2.5%, to settle at $46.04 a barrel. Prices shed about 9% for the quarter and tallied a decline of about 14.3% for the first half of the year, according to FactSet data, based on the most-active contracts. They ended down 4.7% for the month, but saw a weekly rise of 7%.
Data from Baker Hughes released on Friday showed that the number of active U.S. rigs drilling for oil declined by two to 756 rigs this week. That marked only the second time the weekly oil-rig count fell this year. Oil-rig numbers had climbed for 23 weeks in a row.
Prices were already rebounding after official data released Wednesday showed total U.S. crude production dropped by 100,000 barrels a day last week, though some analysts saw the fall as a temporary in the wake of a storm that passed through the Gulf of Mexico.
Other analysts, however, believe that the trend of rising output may soon abate and the weekly fall in the U.S. oil-rig count backed that up.
U.S. producers are expected to cut back on drilling due to lower cash flow from operations caused by the drop in prices. The effect will cause oil to rally off the lows back toward the $50 area.
Still, the majority of investors remain skeptical that oil prices have stabilized because of the potential for stronger output from Libya and Nigeria, members of the Organization of the Petroleum Exporting Countries who aren’t taking part in the cartel-led production-cut agreement.
Société Générale cut its price forecasts for both Brent and WTI Thursday, citing higher-than-expected supply growth from those two countries, as well as the U.S.
Oil prices may comfortably remain in the $40 to $60 range for the year, with some potential upside to that range in 2018 as the global expansion causes a steady increase in demand.