In this December 19, 2014 photo, oil pump jacks work in unison on a foggy morning in Williston, North Dakota. High crude prices catapulted North Dakota into the top tier of the global oil market and helped double or triple the size of once-sleepy towns that suddenly had to accommodate a small army of petroleum workers. AP
NEW YORK, United States – World oil prices advanced Monday following data that showed US oil companies cut drilling activity in response to low prices.
US benchmark West Texas Intermediate for March delivery gained $1.33 to close at $49.57 a barrel on the New York Mercantile Exchange.
European benchmark Brent oil for March delivery jumped $1.76 to $54.75 a barrel in London.
Analysts pointed to the weekly Baker Hughes rig count, which showed a record drop of 94 oil rigs to 1,223 for the week ending January 30.
The rig count was “very bullish,” said Michael Lynch of the consultancy Strategic Energy & Economic Research.
“It’s a logical move, people had not expected such a large drop and that supported the argument we’re going to see a near-term recovery in the market balance.”
The cuts in drilling rigs came on the heels of announcements by Chevron, ConocoPhillips and other major producers that they will slash capital budgets in 2015 in light of lower oil prices.
Traders were also watching a strike at nine US refineries after labor negotiations broke down between union leaders and refiners.
Only one of the nine refineries had curtailed production as a result of the strike, Bloomberg News reported.
The strike pushed up gasoline prices by about nine percent since Friday on worries of constrained refined products supply.
However, analysts said the strike could have a bearish effect on oil prices because there would be less demand for crude supplies if refineries go off line.
RELATED STORIES
Oil rebounds sharply from six-year lows as dollar eases
Oil prices rise as OPEC sees rebound