Oil holds gains near US$47 as US rig count drops to five-year low

[MELBOURNE] Oil held gains near US$47 a barrel amid speculation a sustained decline in US drilling will ease a global glut.

Futures were little changed in New York after advancing 1.9 per cent Friday. Rigs targeting oil in the U.S. fell for the seventh week to the lowest in five years, Baker Hughes Inc. said on its website. Saudi Arabia's commercial crude stockpiles in August climbed to the highest level since at least 2002, according to data from the Joint Organisations Data Initiative.

Oil has fluctuated on signs the market remains oversupplied after trading above US$50 a barrel earlier this month for the first time since July. The Organisation of Petroleum Exporting Countries continues to pump more than its collective quota while US stockpiles remain about 100 million barrels higher than the five-year seasonal average.

West Texas Intermediate for November delivery, which expires Tuesday, was at US$47.39 a barrel on the New York Mercantile Exchange, up 13 cents, at 9.09am Sydney time. The contract gained 88 cents to US$47.26 on Friday. The volume of all futures traded was about 5 per cent below the 100-day average. The more-active December future rose 11 cents to US$47.83.

Brent for December settlement was 9 cents higher at US$50.55 a barrel on the London-based ICE Futures Europe exchange.

BLOOMBERG