Investing.com - West Texas Intermediate oil futures rose more than $1 on Monday, amid speculation an ongoing collapse in rigs drilling for oil in the U.S. will result in lower production.
On the New York Mercantile Exchange, crude oil for May delivery rallied $1.56, or 3.17%, to trade at $50.70 a barrel during European morning hours.
Industry research group Baker Hughes (NYSE:BHI) said Thursday that the number of rigs drilling for oil in the U.S. fell by 11 last week to 802, the 17th-straight week of declines.
Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.
Supply data from the U.S. Energy Information Administration last week showed a drop in U.S. crude output for the first time since late-December, fuelling speculation that an ongoing collapse in rigs drilling for oil will finally result in lower production.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery jumped $1.47, or 2.67%, to trade at $56.42 a barrel as investors assessed the impact of last week’s Iranian nuclear deal on global supplies.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $5.72 a barrel, compared to $5.81 by close of trade on Thursday.
There was no settlement in oil futures on Friday as markets were closed for the start of the Easter holiday.
Oil prices lost almost 5% on Thursday after Western powers negotiated a tentative nuclear deal with Tehran, which could add more crude to an already oversupplied market.
However, oil prices have since regained some ground with market experts largely estimating that a ramp-up in Iranian crude exports could take several months.
Elsewhere, the U.S. dollar weakened against its major rivals on Monday, as indications that the U.S. economy slowed significantly in the first quarter fuelled bets the Fed will hold off on hiking interest rates until late 2015.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.3% to trade at 96.55.
The U.S. Institute of Supply Management said earlier that its non-manufacturing purchasing manager's index slipped to 56.5 last month, in line with forecasts and down from a reading of 56.9 in February.
The report came after the Labor Department said Friday that the U.S. economy added 126,000 new jobs in March, the smallest increase since December 2013. Economists had forecast jobs growth of 245,000 last month.
The surprisingly weak report added to concerns over the outlook for economic growth after other recent economic data pointed to a slowdown at the start of the year.