Investing.com -- Crude oil futures rose modestly on Friday, amid the sharpest rig reduction in the U.S. over the last four weeks.
After two consecutive weeks of minimal declines, oil services firm Baker Hughes (NYSE:BHI) said in its weekly report that the number of oil rigs nationwide declined by 42 to 760 rigs last week, its lowest weekly total since December, 2010. Oil and gas rigs dropped by a combined total of 40 on the week to 988, it lowest combined total since August, 2009.
Since last fall, oil rigs have been closing at an alarming rate. Rig use in the U.S. is down by more than 50% since exceeding a level of 1,600 last October. Rig counts have now declined for 18 straight weeks, marking the fastest decline in the U.S. in more than 25 years.
WTI crude for May delivery moved up roughly 30 cents to $51.85 following the report, building on minor gains earlier in the session. At the close, WTI crude dropped slightly to $51.70, up 0.91 or 1.79%. Crude futures fell to a daily-low of $50.11 in European afternoon trading, before steadily increasing in U.S. morning trading.
Energy traders are keeping a close eye on supply levels, after the U.S. Energy Information Administration reported that that U.S. crude oil storage increased by 10.95 million barrels for the week that ended April 3. The increase represented the largest weekly buildup for WTI crude nationwide since 2001. In addition, the massive buildup pushed U.S. crude stockpiles to 482.4 million barrels, the highest level in more than 80 years.
While rig counts in the U.S. have been declining exponentially, oil is still being pumped at one of its fastest rates in 30 years.
On the Intercontinental Exchange (ICE), brent crude for May delivery gained 1.34 or 2.37% to close at $57.91 a barrel. The spread between international and U.S. domestic benchmarks stood at $6.21, up from $5.74 on Thursday.
High geopolitical risk throughout the Persian Gulf has weighed on crude over the last two weeks. On April 2, crude prices plunged after Iran reached the framework of a deal with Western powers regarding its nuclear program. The preliminary accord resulted in the easing of economic and financial sanctions levied by the U.S. and the European Union that have limited Iranian exports to approximately a million barrels of crude oil per day since 2012.
On Thursday, Ayatollah Ali Khamenei, Iran's supreme leader, took a hard line against sanctions, asserting in an address in Theran that the restrictions "should be lifted all together on the same day of the agreement, not six months or one year later." The White House and its Western partners have been in favor of gradual easing of sanctions.
The release of a surfeit of Iranian oil into a global market that is already beset by a glut of supply has exacerbated concerns of a further decline in prices. Crude futures are down by more than 50% since last July.
Elsewhere, a large supply of Nigerian oil is expected to head to Europe following weak demand for West African light sweet crude in Asia over the last several months, Platts reported. Nigeria is the largest oil producer in Africa, according to the EIA.