Oil trades near $53 as U.S. drilling accelerates amid OPEC cuts

NEW YORK (Bloomberg) -- Oil traded near $53/bbl after drilling in the U.S. climbed to the highest in more than a year, countering OPEC’s efforts to clear a supply glut.

Futures were little changed in New York after falling 1.1% on Friday. Rigs targeting crude in the U.S. rose last week to the most since November 2015, according to Baker Hughes, while American crude output is at the highest since April, government data shows. Oil supplies from OPEC are sliding this month, according to tanker-tracker Petro-Logistics SA.

Oil has fluctuated above $50/bbl since 11 nations including Russia last month joined with the Organization of Petroleum Exporting Countries to trim supply. While Saudi Arabia says more than 80% of the targeted cuts have been implemented since the deal took effect on Jan. 1, the International Energy Agency predicted a gain in U.S. shale output as prices rise.

“Yet another good shale oil week,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. “OPEC’s decision to cut production has lifted prices” and this “will accelerate the revival of U.S. shale oil production.”

West Texas Intermediate for March delivery dropped as much as 33 cents to $52.84/bbl on the New York Mercantile Exchange and was at $53.16 at 10 a.m. in London. Total volume traded was about 26% below the 100-day average. The contract slid 61 cents to $53.17 on Friday.

Rig Count

Brent for March settlement, which expires Tuesday, fell 9 cents, or 0.2%, to $55.43/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.27 to WTI. The more-active April contract lost as much as 47 cents to $55.32.

The U.S. oil rig count climbed by 15 to 566 last week, according to data from Baker Hughes on Friday. Explorers have added rigs for eight months, the longest run since September 2014. American crude production is at 8.96 MMbpd, according to the Energy Information Administration.