Oil advanced as Abu Dhabi forecast prices could climb as high as $60 a barrel amid a glut that’s shrunk quicker than projected.
Futures rose as much as 1.1 per cent in New York and 0.9 per cent in London. The global surplus is down to 1.2 million to 1.5 million barrels a day and has contracted faster than expected, said Ali Majed Al Mansoori, chairman of Abu Dhabi Department of Economic Development. US drilling increased from the lowest level in more than six years, according to data from Baker Hughes.
Oil has surged about 85 per cent from a 12-year low earlier this year on disruptions and falling US output under pressure from Opec’s policy of sustaining production. Members of the group rejected a proposal to adopt a new output ceiling last week, with outgoing secretary-general Abdalla El-Badri saying that it’s difficult to find a target as Iranian supply rises and significant Libyan volumes are halted.
“At the moment, there does seem to be steady support above the $45 level,” Angus Nicholson, a markets analyst in Melbourne at IG, said by phone. “The biggest concern for prices going forward is whether the rig count will continue to pick up over the next few weeks.”
West Texas Intermediate for July delivery gained as much as 54 cents to $49.16 a barrel on the New York Mercantile Exchange and was at $49.10 at 12.54pm Hong Kong time. The contract slid 55 cents to $48.62 on Friday, capping a 1.4 per cent weekly decline. Total volume traded was about 41 per cent below the 100-day average.
Brent for August settlement increased as much as 45 cents to $50.09 a barrel on the London-based ICE Futures Europe exchange. Prices slipped 40 cents to close at $49.64 on Friday. The global benchmark crude was at a 48-cent premium to WTI for August.
The market recovery is on track and a price range of $55 to $60 is possible this year, Mr Al Mansoori said in a Bloomberg television interview. Abu Dhabi controls most of the oil reserves in the UAE, Opec’s fourth-largest producer. The UAE holds about 6 per cent of world crude deposits.
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