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Brent crude prices steadied above $65 a barrel on Monday, supported by signs that US shale output may have started to decline and concerns that fighting in Yemen could disrupt West Asian supplies.
The number of active US rigs drilling for oil has fallen for a record 20 weeks in a row to the lowest since 2010, according to data from oil services firm Baker Hughes, fuelling expectations of a drop in US production.
Brent rose 18 cents to $65.46 a barrel by 0838 GMT, after posting its third straight weekly gain last week and touching a 4-1/2-month high of $65.80.
US crude rose 5 cents to $57.20 a barrel, after increasing for the sixth consecutive week in its longest stretch of gains since the first quarter of 2014.
“Overall we are in an upwards trend and we do appear to have found a short-term base,’’ said Michael Hewson, chief market analyst at CMC Markets.
“There's a good chance we could see $70 a barrel (for Brent) over the course of the next month or so.’’
Fighting in Yemen raged on as Saudi Arabia continued its air strikes against Houthi militia forces in Aden.
While Yemen itself is not among the biggest oil producers in the region, Gulf producers ship oil along the Gulf of Aden on Yemen’s southern coast and through the narrow straits of Bab el-Mandeb, between Yemen and Djibouti.
Prince Abdulaziz Bin Salman Bin Abdulaziz, the deputy oil minister of Saudi Arabia, said on Monday that the kingdom’s high oil production policy was based on the status of global demand.
Speaking to reporters in Saudi Arabia, the world’s top oil exporter, he said the market was “excellent’’ and that Riyadh was keen to maintain its market share.
But analysts said demand would need to grow in order to keep prices higher.
“Sustaining the recent oil price rally requires firmer demand and a tangible supply response,’’ Barclays analysts said in a note.
“The cart is moving ahead of the horse, and we take a cautious view on further price appreciation over the near term.’’
Libya’s oil output is set to fall again as a strike by Libyan security guards over salary payments has forced the closure of the western El Feel oilfield, a spokesman for state oil firm NOC said on Sunday.
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