Oil prices up on strong U.S. data and lower oil-rig count

On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $32.95 a barrel at 0246 GMT, up $0.17 in the Globex electronic session. April Brent crude on London’s ICE Futures exchange rose $0.45 to $35.55 a barrel.

U.S. consumer spending grew in January at the fastest clip in eight months, new data showed Friday, as a strong job market and robust wage gains boosted Americans’ propensity to spend.

The pickup followed other improvement across the economy in January, including stronger retail sales and home purchases. A report Thursday showed new orders for big-ticket durable goods also increased last month following their worst annual performance since the recession, suggesting the U.S. manufacturing sector could be on the mend.

"This is great news for oil because it signals higher future demand,” said an energy analyst at an Australia bank.

Oversupply and tepid demand growth have pushed down prices by around 70% since mid-2014. Analysts say the persistently low prices are forcing some high-cost producers, such as those in North America, to trim production in order minimize cost.

The latest data released by the U.S. Energy Information Administration shows U.S. crude production continues to be on a downtrend, falling to 9.1 million barrels a day in the end week ended Feb 19.

Last week, the U.S. oil-rig count also slid further, falling by 26 to 413, according to a report by industry group Baker Hughes. There are now about 68% fewer rigs of all kinds from a peak of 1,609 in October 2014.

The number of U.S. oil-drilling rigs, viewed as a proxy for activity in the oil industry, has fallen sharply since oil prices began to fall.

According to an analysis by Cantor Fitzgerald & Co. of 53 producers, U.S. crude-oil production is expected to fall 1.1% this year and expand 1.7% in 2017, down from expectations at the end of last year for growth of 4.6% in 2016 and a 3.1% expansion next year.

(WSJ)