Crude Oil Surges 5% on Falling Rig Count, Set to Record 90% Gain in May

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Crude oil futures rallied as much as 5% to finish the holiday-shortened trading week, buoyed by a decrease in the total rig count. Overall, US crude prices will post a record 90% gain in May after collapsing 130% in April. Could oil repeat this performance next month?

July West Texas Intermediate (WTI) crude futures surged $1.52, or 4.51%, to $35.23 per barrel at 18:43 GMT on Friday on the New York Mercantile Exchange. Crude prices are poised for a weekly jump of about 5%, paring their year-to-date losses to around 42%.

Brent, the international benchmark for oil prices, is also soaring to end the trading week. August Brent crude futures advanced $1.54, or 4.27%, to $37.57 a barrel on London’s ICE Futures exchange. Brent is set to post a 7% weekly gain, shedding its 2020 decline to 43%.

In total, both WTI and Brent crude will enjoy a monumental performance in May. US crude skyrocketed 90% this month, while Brent prices surged 50%.

According to Baker Hughes, the number of active US rigs drilling for oil decreased by 15 to 222 for the week ending May 29. This is the 11th consecutive week that the oil-rig count has declined, signaling to financial markets of additional declines in domestic production levels. The total active US rig count also slipped by 17 to 301.

On Thursday, the US Energy Information Administration (EIA) reported that domestic stockpiles unexpectedly surged 7.9 million barrels for the week ending May 22. Stockpiles at the Cushing, Oklahoma storage facility declined by 3.4 million barrels. Gasoline inventories dropped 700,000 barrels, while distillate inventories jumped 5.5 million barrels.

The next big thing that crude markets will monitor is Russia and its efforts to curtail production cuts in July. Moscow is petitioning the Organization of the Petroleum Exporting Countries (OPEC) to reduce the output cuts that were established last month, but analysts say it is unlikely to happen.

In other energy commodities, July natural gas futures edged up $0.02, or 1.05%, to $1.846 per million British thermal units. July gasoline futures surged $0.0432, or 4.21%, to $1.0692 a gallon. July heating oil futures rose $0.0502, or 5.22%, to $1.026 per gallon.

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