Crude rebounds as U.S. oil rig count declines to five-year low

By MARK SHENK on 11/20/2015

HOUSTON (Bloomberg) -- Crude rose after the number of active U.S. oil rigs dropped to a five-year low and as European Central Bank President Mario Draghi hinted at additional stimulus.

Futures in New York rebounded from the lowest level in almost three months. The number of active oil rigs in the U.S. dropped by 10 to 564 this week, according to data compiled by Baker Hughes Inc. Draghi set the scene for further action in two weeks’ time, saying the institution will do what’s necessary to reach its inflation goal rapidly.

"Given how low prices are it will take a lot to get them to move lower," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. "The falling U.S. rig count and Draghi’s hints of a more accommodative monetary policy are behind today’s rebound."

Oil has slumped about 47% in the past year amid speculation a surplus will persist as the Organization of Petroleum Exporting Countries, threatened by surging output mainly from North America and Russia, continues to pump above its quota. U.S. crude inventories expanded for an eighth week, leaving supplies more than 100 MMbbl above the five-year average level for this time of year, government data showed Wednesday.

West Texas Intermediate for December delivery, which expires Friday, rose 10 cents to $40.64/bbl at 1:18 p.m. on the New York Mercantile Exchange. The contract touched $39.88, the lowest intraday level since Aug. 27. The more-active January futures increased 85 cents to $42.57.

Brent for January settlement advanced $1.16, or 2.6%, to $45.34/bbl on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a $2.77 premium to January WTI.

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