Investing.com – Crude futures extended gains for the seventh day in a row as data showed the number of active U.S. drilling rigs declined for the first time since January suggesting that U.S. production could be tightening, easing oversupply jitters.
On the New York Mercantile Exchange crude futures for August delivery added $1.11 to settle at $46.04 a barrel, while on London's Intercontinental Exchange, Brent gained $0.53 flat at $48.60 a barrel.
Oilfield services firm Barker Hughes reported its weekly U.S. rig count fell by 2 to a total of 756, ending a trend that has seen the number of U.S. rigs increase since for six-straight months.
The weekly rig count is an important barometer for the drilling industry and serves as a proxy for oil production and oil services demand.
The surprise dip in the number of active U.S. drilling rigs comes amid a rebound oil prices, as investors seemed to take advantage of the recent slump in oil prices into bear market territory.
Some commentators remained adamant, however, that the recent bounce in oil prices would be temporary, as Opec and its allies’ continue to struggle to tackle the underlying problem of oversupply in the industry, which has pressured prices for nearly three years.
"There's a real problem out there in the crude oil market. You're going to get a rally and the market is rallying today. It's been rallying for the past 4 or 5 days. It is nothing but a dead cat bounce," the editor and publisher of The Gartman Letter said in an interview with cnbc.
In May, Opec and non-Opec members agreed to extend production cuts for a period of nine months until March, but stuck to production cuts of 1.8 million bpd agreed in November last year.