Agency: Oil price appears to have ‘bottomed out’
PARIS – An organization representing major oil-consuming nations said Friday signs of a market that “bottomed out” are emerging.
U.S. crude prices jumped to a high for the year. Brent crude, used as a global benchmark, hit a high for the year Tuesday and rose 1 percent Friday.
Energy companies have been shutting down rigs and laying off thousands of workers as oil prices plunged to about $30 per barrel, from more than $100 per barrel just two years ago.
A broad retreat by the energy sector played out again Friday on both fronts.
The number of oil and natural gas rigs active in the United States fell for the 12th consecutive week, according to Baker Hughes on Friday. The total of 480 rigs is the lowest level in decades and, perhaps, the fewest since the earliest days of the oil drilling industry.
Texas driller Anadarko Petroleum Corp. said it would cut 1,000 workers, 17 percent of its workforce.
The pain at Anadarko and other energy companies may finally be translating into a reduction of a massive and global oversupply of oil, the International Energy Agency said Friday.
OPEC production tumbled by 90,000 barrels a day last month, the IEA said. U.S. production, which surged because of new drilling technology, is expected to fall by almost 530,000 barrels a day this year, according to the IEA.
The Paris organization, however, said the recovery in crude prices in recent days from multiyear lows does not mean there will be a significant and sustained rebound in the short-term. There have been sharp declines in demand, particularly in the United States and China, it said.
China, the world’s second-largest oil consumer, is attempting to quell anxiety over a slowing economy and labor unrest. Earlier this month, it cut its growth expectations for the year.
Goldman Sachs said Friday production is unlikely to increase in the United States until 2017, and prices could be volatile in the next few months.
Analysts with Goldman said if U.S. drillers ramp up production with any rise in oil prices, “we believe a self-defeating rally in oil prices/equities could result.”
The report buoyed stocks of energy companies Friday, making the sector the second-best performer on the Standard & Poor’s 500 index.