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Oil rises towards US$61 after yearly gains as US drillers pause

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After capping its second annual gain, oil started 2018 by advancing towards US$61 as US drilling activity remained at a standstill following a slip in production and as protests continued in Iran.

[HONG KONG] After capping its second annual gain, oil started 2018 by advancing towards US$61 as US drilling activity remained at a standstill following a slip in production and as protests continued in Iran.

Futures climbed 0.4 per cent in New York after a 3.3 per cent increase last week. US drillers targeting crude kept the rig count unchanged for a second week at 747, Baker Hughes said on Friday. The death toll during the unrest in Iran, Opec's (Organization of the Petroleum Exporting Countries) third-largest producer, rose as security forces clashed with demonstrators rallying in a rare show of displeasure with the country's leaders.

Oil in 2017 extended its recovery from a low point nearly two years ago as Opec and its allies trimmed supply to reduce a global glut. US crude output fell through Dec 22 for the first time since mid-October, slipping from a weekly record after a nine-week expansion.

"There is some momentum for oil at the moment and that could continue," said Ric Spooner, a Sydney-based analyst at CMC Markets.

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"There appears to be a developing consensus that the increase in US shale production this year may not be as significant as many had forecast."

West Texas Intermediate (WTI) for February delivery was at US$60.66 a barrel on the New York Mercantile Exchange, up 24 US cents, at 2.32pm in Hong Kong. Total volume traded was about 13 per cent above the 100-day average. Prices added 58 US cents to US$60.42 on Friday, ending the year up more than 12 per cent.

Brent for March settlement gained 32 US cents, or 0.5 per cent, to US$67.19 a barrel on the London-based ICE Futures Europe exchange. Front-month prices rose about 18 per cent last year for a second annual increase. The global benchmark crude traded at a premium of US$6.50 to March WTI.

Though the Iranian unrest that began on Thursday in the north-eastern city of Mashhad initially targeted the government's handling of the economy, the focus expanded within a day to the religious establishment and state security forces. Accounts varied, but as many as a dozen people may have died.

Oil-market news: Repairs to a Libyan pipeline damaged on Dec 26 were completed Saturday and pumping of oil to the Es Sider terminal has resumed, according to a person directly involved with the matter.

The North Sea's Forties Pipeline System, which carries crude used to price the benchmark Dated Brent, is fully operational after being shut early last month due to the discovery of a crack.

BLOOMBERG