By Jessica Resnick-Ault
NEW YORK (Reuters) – Oil prices rose on Friday, with U.S. crude touching a two-year high, strengthening after U.S. rig data suggested drilling in the United States would throttle back.
The latest rig data supported the market’s view that a global supply glut is receding. Throughout the week, prices have been bolstered by rising global demand data and expectations that OPEC and other producing countries will extend a deal to cut output.
U.S. West Texas Intermediate (WTI) crude settled up $1.10 or 2 percent, at $55.64 a barrel, the highest since July 2015.
Global benchmark Brent futures settled up $1.45 or 2.4 percent at $62.07 a barrel. Brent has risen around 38 percent since its low in June 2017.
Both grades gained more than 3 percent in the week.
U.S. energy companies cut eight oil rigs this week, the biggest reduction since May 2016, extending a drilling decline that started over the summer when prices slipped below $50 a barrel.
The oil rig count fell to 729 in the week to Nov. 3, the lowest level since May, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
“The market continues to find support from expectations that we’re going to see the cut extended and from robust demand,” said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.
The Organization of the Petroleum Exporting Countries meets at the end of November to discuss further action after it agreed nearly a year ago with Russia and other producers to hold back 1.8 million barrels per day (bpd) of oil supply.
Russia said on Thursday the deal, due to expire in March, could be extended but a decision was not imminent.
China’s roughly 9 million bpd of imports have surpassed those of the United States to top the world’s crude importer list.
“There’s an idea that the global economy is looking pretty good,” McGillian said, pointing to rising demand in other regions.
“China’s oil demand growth appears to be accelerating,” investment bank Jefferies said.
Physical oil prices are also rising. Saudi Aramco, the UAE’s ADNOC and Qatar Petroleum have all raised their crude prices for Asian buyers, with Aramco’s December premium over the average of the Oman and Dubai benchmarks now at the highest in three years.
Traders also eyed risks from ongoing financial troubles of OPEC-members Venezuela and its state oil company PDVSA.
The government and PDVSA owe some $1.6 billion in debt service and delayed interest payments by the end of the year, plus another $9 billion in bond servicing in 2018.
The next hard payment deadline for PDVSA is an $81 million bond payment that was due on Oct. 12 but on which the company delayed payment under a 30-day grace period. Failing to pay that on time would trigger a default, investors say.
(Additional reporting by Henning Gloystein in Singapore and Karolin Schaps in Amsterdam; Editing by David Gregorio and Lisa Shumaker)