Oil rises toward $61 after yearly gains as US drillers pause

Productions cuts and continued protests in Iran have helped oil prices advance toward $61 a barrel. Thibault Camus / AP Photo.

After capping its second annual gain, oil started 2018 by advancing toward $61 as US drilling activity remained at a standstill following a slip in production and as protests continued in Iran.

Futures climbed 0.4 per cent in New York after a 3.3 per cent increase last week. US drillers targeting crude kept the rig count unchanged for a second week at 747, Baker Hughes said Friday. The death toll during the unrest in Iran, Opec's third-largest producer, rose as security forces clashed with demonstrators rallying in a rare show of displeasure with the country’s leaders.

Oil in 2017 extended its recovery from a low point nearly two years ago as the Opec and its allies trimmed supply to reduce a global glut. US crude output fell through December 22 for the first time since mid-October, slipping from a weekly record after a nine-week expansion.

“There is some momentum for oil at the moment and that could continue,” said Ric Spooner, a Sydney-based analyst at CMC Markets. “There appears to be a developing consensus that the increase in US shale production this year may not be as significant as many had forecast.”

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West Texas Intermediate for February delivery was at $60.66 a barrel on the New York Mercantile Exchange, up 24 cents, at 2:32pm in Hong Kong. Total volume traded was about 13 per cent above the 100-day average. Prices added 58 cents to $60.42 on Friday, ending the year up more than 12 per cent.

Brent for March settlement gained 32 cents, or 0.5 per cent, to $67.19 a barrel on the London-based ICE Futures Europe exchange. Front-month prices rose about 18 per cent last year for a second annual increase. The global benchmark crude traded at a premium of $6.50 to March WTI.

Though the Iranian unrest that began Thursday in the northeastern city of Mashhad initially targeted the government’s handling of the economy, the focus expanded within a day to the religious establishment and state security forces. Accounts varied, but as many as a dozen people may have died.