US oil settles $38.10 a barrel, posts 9% weekly gain

U.S. oil has gained support from falling inventories, reduced drilling and the lifting of a ban on most U.S. crude exports, which has pushed U.S. crude to a premium to global benchmark Brent for the first time in about a year. 

Front-month West Texas Intermediate (WTI) crude futures settled 60 cents higher, or 1.6 percent, at $38.10 a barrel, posting a 9-percent gain on the week, the biggest weekly gain since early October.

Internationally traded Brent futures traded up 52 cents at $37.88 a barrel.

"For now, there is still an ample supply of crude and a huge amount in storage," said Olivier Jakob, oil analyst at Petromatrix in Switzerland.

Crude gained support from the latest snapshot of U.S. supplies on Wednesday. Crude inventories, which were expected to rise, fell 5.88 million barrels, the Energy Information Administration said.

The tightening physical market came just as U.S. energy group Enterprise and oil trader Vitol raced to exploit the end of the ban on most U.S. crude exports, loading a 600,000-barrel cargo of domestic light crude oil scheduled for the first week of January, reportedly heading for Europe, though Asian buyers might also be interested in U.S. cargoes. 

Baker Hughes reported that U.S. oil drillers cut rigs for a fifth week in the last six, a sign that low prices are curbing activity and could slow output.

"The current rig count is... pointing to U.S. production declining sequentially between 2Q15 and 4Q15 by 320,000 barrels per day," Goldman Sachs said. 

Even after this week's rally, Brent has more than halved from over $100 a barrel 18 months ago pressured by a supply glut that according to OPEC figures is currently over 2 million barrels per day.

 

(Reuters)