Oil Hits April 2009 Low, Then Pares Loss On U.S. Oil Rig Data
Global oil markets resumed their slide on Friday, with Brent and U.S. crude hitting April 2009 lows and ending down for a seventh straight week, although prices recovered from their lows after a sharp drop in the U.S. oil rig count.
Benchmark Brent crude broke below $49 a barrel but closed above the $50 support level it had clung to this week after oil services firm Baker Hughes reported the largest drop in 24 years in the number of U.S. oil drilling rigs.
Crude prices had barely moved in the past two sessions after tumbling 10 percent the first two days of the week.
In Friday's early trade in New York, prices drifted about 50 cents lower as robust U.S. jobs data for December helped limit losses.
The selling gained force about an hour to noon, pushing both Brent and U.S. crude to an April 2009 trough. Prices retraced their losses after the rig count issued by Baker Hughes.
“In my opinion we have not stabilized out yet,” said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York. “I do think that after seven weeks of losses, you will see a bounceback at some point, and people are waiting for that to short into. I am.”
Brent LCOc1 settled down 85 cents at $50.11 a barrel, after falling earlier to $48.90.
U.S. crude CLc1 settled down 43 cents at $48.36, having hit $47.16 earlier.
For the week, Brent lost 11 percent and U.S. crude 8 percent.
Brent's premium to U.S. crude, meanwhile, fell to a near three-month low of $1.70 a barrel. In June, before the market tumble that erased more than 50 percent off oil prices, Brent traded nearly $10 higher to U.S. crude.
The number of rigs drilling for oil in the United States fell by 61 this week, the most in a week since 1991, Baker Hughes reported. The rig count has fallen in 10 of the last 13 weeks, from a record high of 1,609 in mid-October. The current count of 1,421 in the week to Jan. 9 is the lowest since February.
Oil analysis firm Wood Mackenzie said in a report on Friday that even at $40 levels, less than 2 percent of global crude production was at risk of making losses.
“Operators may prefer to continue producing oil at a loss rather than stop production – especially for large projects such as oil sands and mature fields in the North Sea,” Wood Mackenzie analyst Robert Plummer added.