Oil near US$42 after US adds oil rigs for longest streak in year

[TOKYO] Oil traded near US$42 a barrel as US oil drillers added rigs for the sixth-straight week, marking the longest period of expansion in a year.

Futures rose as much as 0.5 per cent in New York. Rigs targeting crude in the US rose by 7 to 381 last week, the highest level since March, Baker Hughes Inc said on its website Friday. Government figures Wednesday showed gasoline inventories fell, while crude stockpiles unexpectedly rose. Both are at the highest seasonal level in at least two decades.

Oil is fluctuating after tumbling more than 20 per cent into a bear market and closing below US$40 a barrel on Tuesday for the first time in almost four months. Analysts from Citigroup Inc to Bank of America Merrill Lynch predicted the slump would be short-lived, while Societe Generale SA said the price correction would be limited due to a better balance between supply and demand.

West Texas Intermediate for September delivery increased as much as 20 cents, or 0.5 per cent, to US$42 a barrel on the New York Mercantile Exchange and was at US$41.90 at 7:03 am Tokyo time. Futures on Friday fell 13 US cents to settle at US$41.80. Total volume traded was 6.4 per cent above the 100-day average.

Brent for October settlement added 8 US cents to US$44.35 a barrel on the London-based ICE Futures Europe exchange. It declined 2 US cents to settle at US$44.27 a barrel on Friday. The global benchmark traded at a US$1.68 premium to WTI for October delivery.

BLOOMBERG