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Oil holds gains near US$45 as falling rigs signal US output cuts
[SEOUL] Oil held gains above US$45 a barrel after data showed a reduction in the number of rigs drilling for crude in the US, signaling output cuts in the world's biggest consumer.
Futures climbed as much as 0.5 per cent in New York, extending Friday's 1.8 per cent advance. The number of active rigs fell by 26 to 614 last week, a five-year low, according to data from Baker Hughes Inc, an oil-field services company.
Saudi Arabia cut pricing for November supplies to Asia and the US as the world's largest crude exporter seeks to keep its cargoes competitive with rival suppliers amid sluggish demand.
Oil has held near US$45 a barrel for more than four weeks after plunging to a six-year low in August, even as US crude stockpiles stay about 100 million barrels above the five-year seasonal average and Opec pumps above its output target. That prices are ignoring bad news is usually a sign that a rebound is round the corner, investor Jim Rogers said last week.
"The fall in the number of oil rigs in the US will accelerate the decrease in crude production we've been seeing recently," Hong Sung Ki, a Seoul-based commodities analyst at Samsung Futures Inc, said by phone. "Saudi Arabia's cut in official selling prices is quite meaningful as it indicates that Opec is still willing to fight for market share."
WTI for November delivery rose as much as 22 cents to US$45.76 a barrel on the New York Mercantile Exchange and was at US$45.62 at 8.47am in Singapore. The contract gained 80 cents to US$45.54 on Friday. The volume of all futures traded was about 30 per cent above the 100-day average.
Brent for November settlement climbed as much as 27 cents, or 0.6 per cent, to US$48.40 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a US$2.60 premium to WTI.
Rigs targeting oil in the US have fallen for a fifth straight week, and the number of machines is now more than 60 per cent lower than a year ago. Meanwhile, the nation's production has dropped in seven of the eight weeks through Sept 25.