LONDON--Oil futures edged up on Friday as the International
Energy Agency said a price recovery might be in sight.
Crude has lost more than half of its value since last summer as
a combination of ample supply and lackluster demand spooked the
markets.
Brent crude for delivery in March rose more than 2% to $49.28 a
barrel on London's ICE Futures exchange. Brent, the global oil
benchmark, was down 12 out of the past 15 sessions bringing its
year-to-date decline to more than 15%.
February-dated WTI, the U.S. price benchmark, traded at $47.28 a
barrel, up a dollar from Thursday's settlement on the New York
Mercantile Exchange.
"A price recovery--barring any major disruption--may not be
imminent, but signs are mounting that the tide will turn," the IEA
said in its closely watched monthly oil market report on
Friday.
In a sign that Organization of the Petroleum Exporting
Countries' strategy to defend its market share may be working, the
IEA slashed its forecast for the increase in non-OPEC oil supply
this year by 350,000 barrels a day, saying that the production cut
is expected to bolster demand for OPEC's own output.
The 12-member oil cartel decided in November not to cut output
despite the price rout as it sought to protect its position in the
market threatened by the booming U.S. shale industry.
James Hubbard, head of Asian oil and gas research at Macquarie
Group, said that prices below $40 a barrel would make it difficult
for producers to break even, prompting them to begin limiting
production.
"Once WTI goes below $40 a barrel and thereabouts you'll start
to see headlines of production starting to shut in, in North
America and potentially in the North Sea," Mr. Hubbard said.
Major oil companies are already busy laying off workers and
cutting their budgets as crude's price has fallen close to 60%
since a peak in June.
Schlumberger Ltd., the world's largest oil-field service
company, said Thursday that it laid off 9,000 workers late last
year, reducing global head count 7%. Also on Thursday, BP PLC
announced it would lay off about 300 people in the North Sea hub of
Aberdeen, Scotland.
Nymex reformulated gasoline blendstock for February--the
benchmark gasoline contract--rose 1.4% to $1.3171 a gallon, while
ICE gas oil for February changed hands at $473.50 a metric ton, up
$0.50 from Thursday's settlement.
Sarah Kent and Eric Yep contributed to this article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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