Crude oil surges as US oil rig count falls

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Crude oil futures jumped in the domestic and overseas market on Friday as investors and speculators booked fresh positions in the energy commodity as a decline in US rig count and a cutback in proposed capital spending by US oil majors in response to a slump in prices raised speculation of lower production which may ease a supply glut in the global oil market.

US rig count fell to the lowest level in three years to 1,223 in the week ended January 30, dropping by 94 from the prior week.

Chevron said that it has slashed its proposed capital spend this year by 13 per cent to USD 35 billion from USD 40.3 billion in 2014.

A gauge measuring US consumer sentiment hit the highest level in eleven years at 98.1 in January 2015 from 93.6 in December 2014 while consumer spending rose at the fastest clip since Q1 2006, expanding at an annualized 4.3 per cent in Q4 2014, brightening the demand outlook for the fuel.

A gauge measuring US business activity rose to 59.4 in January from 58.8 in December, with a reading above 50 signaling expansion.

Investors cast aside a slowdown in US economic growth to an annualized 2.6 per cent in the October-December 2014 period from a 5 per cent advance in Q3.

Oil may fall today as the biggest strike by US workers since 1980s is seen cutting processing demand in the world's biggest oil consumer.

At the MCX, Crude oil futures, for the February 2015 contract, closed at Rs 2,855 per barrel, up by 3.66 per cent, after opening at Rs 2,771, against the previous close price of Rs 2,754. It touched an intraday high of Rs 2,867 till the closing.

Story first published: Monday, February 2, 2015, 12:40 [IST]
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