Oil futures settled back above $40 a barrel on Monday for the first time since late March, buoyed by a third straight week of declines in the number of U.S. rigs drilling for crude, according to Bloomberg MarketWatch.
Prices got an added boost after U.S. government data, released just ahead of the settlement, revealed expectations for a sizable decline in next month’s domestic shale oil production.
Crude for delivery in May settled at $40.36 a barrel on the New York Mercantile Exchange, up 64 cents, or 1.6%.
June Brent crude on London’s ICE Futures Exchange climbed by 89 cents, or 2.1%, to $42.83 a barrel.
“There are signs that demand for oil is exceeding expectations and the market is at a point where we should see U.S. oil production continue to fall,” said Phil Flynn, senior market analyst with Price Futures Group.
Just ahead of the settlement for WTI oil prices Monday, the U.S. Energy Information Administration said in a monthly report that oil output from seven major domestic shale plays is expected to fall by 114,000 barrels a day in May from April.
Last week, separate data showed that U.S. crude inventories and drilling activites declined. The U.S. oil rig count fell by eight to 354 in the latest week, according to Baker Hughes.
U.S. crude stockpiles also fell in the week ended April 1 by 4.9 million barrels to 529.9 million barrels, but remains at historically high levels for this time of year, the EIA said Wednesday.
May natural gas lost 7.8 cents, or 3.9%, to $1.912 per million British thermal units, continuing to pull back from the two month high it hit on Thursday.
