Crude Oil Prices Settle Higher as Traders Up Bets on Crude Supply Shortage

Investing.com – WTI crude oil prices settled nearly 1% higher Friday as signs of a slowdown in U.S. output, and continued supply outages, prompted traders to increase their bullish bets on oil.

On the New York Mercantile Exchange for August delivery gained 66 cents, or nearly 1% to settle at $74.11 a barrel, while on London’s Intercontinental Exchange, climbed 2.1% to trade at $79.70 a barrel. WTI crude oil prices settled above $74 a barrel for the first time since November 2014.

Oilfield services firm Baker Hughes reported on Friday that the number of U.S. oil drilling rigs in operation fell by 4 to 858 in the week to June 22. That was the second-straight weekly drop in rig counts, raising investor hopes that the rampant pace of domestic output could be slowing at a time of rising global demand.

Crude oil prices were also supported by ongoing expectations that global supplies will come under pressure as more countries could back US sanctions against Iran, stifling the country’s crude exports, adding a supply-risk premium to oil prices.

This comes despite reports Thursday the United States would be willing to work countries on a case by case basis to help them cut their Iranian crude imports, a State Department official said on Thursday, as reported by Reuters.

“Our focus is to work with those countries importing Iranian crude oil to get as many of them as possible down to zero by November 4,” a State Department official told Reuters, adding: “We are prepared to work with countries that are reducing their imports on a case by case basis.”

Unexpected disruptions in Canada, Libya and Venezuela, meanwhile, reined in supply, further lifting sentiment on oil prices.

A production shutdown at Canada’s Syncrude, which has capacity to produce 350,000 barrels per day of oil, drained crude supply across North America, supporting the in U.S. crude supplies reported earlier this week.

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