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Thursday, September 19th, 2019

Oil approaches 2015 highs on fewer U.S. rigs, OPEC

by January 8, 2018 General

By Gloystein and Dmitry Zhdannikov

SINGAPORE/(Reuters) – prices rose on Monday, coming close to three-year highs on a slight decline in the number of U.S. rigs drilling for new production and sustained OPEC output cuts.

U.S. Intermediate (WTI) crude futures had risen to $61.67 a barrel by 1422 GMT, 23 cents above their last settlement. WTI last week reached $62.21, the highest since May 2015.

Brent crude futures were at $67.78 a barrel, 16 cents above their last close. Brent hit $68.27 last week, the highest since May 2015.

Traders said the gains were due to a slight decline in the number of U.S. rigs drilling for new production. The rig count eased by five in the week to Jan. 5 to 742, according to data from services firm

Despite this, U.S. production is expected soon to rise above 10 million barrels per day, largely thanks to soaring output from shale drillers. Only and produce more.

“The U.S. price is now into a range that is anticipated to attract increased shale production,” said Ric Spooner, at in

“Traders may decide that discretion is the better part of valour while markets wait on evidence of what happens to the rig count and production levels over the next couple of months.”

Rising U.S. production is the main factor countering output cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries and by Russia, which began in January last year and are set to last through 2018.

A senior OPEC source from a major Middle Eastern producer said on Monday that OPEC was monitoring unrest in as well as Venezuela’s economic crisis, but will boost output only if there are significant and sustained production disruptions from those countries.

Stephen Innes, of trading for Asia/Pacific at in Singapore, said “the OPEC vs shale debate will rage” this year, being a key price-driving factor.

However, Innes added that turmoil would remain a key focus for markets and had the potential to “send prices rocketing higher”.

(Reporting by Gloystein, and Dmitry Zhdannikov; Editing by Dale Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)