Oil rose this week on easing supply glut fears, partly arising from recent investment cutbacks by top global energy firms, analysts said.
Royal Dutch Shell revealed the scrapping of costly exploration in Alaska and Canada, alongside sharply lower oil and gas prices, had sparked a $7.4-billion third-quarter net loss.
British rival BP meanwhile unveiled plans to scale back investment and sell more assets, in response diving third-quarter profits.
And on Friday, US oil giant Chevron announced plans to slice capital expenditure next year by 25 percent to $28 billion at most, after posting slumping third-quarter earnings.
ExxonMobil also reported a big drop in Q3 profits as lower oil and gas prices weighed on its exploration and production business.
“This week, the highlight has been the recent investment cutbacks from major energy companies, which contributed to easing supply glut concerns,” Sucden analyst Myrto Sokou said.
A raft of energy companies — also including US pair ConocoPhillips and Hess Corp., and Total of France— have all either delayed, trimmed or axed projects in response to sliding profits and sharply lower energy prices.
“It’s all about the 2016 oil market balance outlook,” SEB analyst Bjarne Schieldrop told AFP when asked about the week’s price gains.
The rebounding market was “about oil companies reporting large cuts in spending and production for 2016.”
Oil prices have plunged from peaks above $100 a barrel early last year owing to a stubborn global supply glut, slackening demand, record OPEC production and a strong US dollar.
On Monday, the head of the International Energy Agency warned of further falls in investment.
IEA executive director Fatih Birol said ample oil supplies likely would extend into the middle of next year — but investment is expected to drop further because of persistently low prices.
“Looking at the next few months until mid-2016 we see that the markets are comfortably supplied,” he told an energy conference in Singapore.
He added oil investment is already down 20 percent worldwide this year and another drop is likely in 2016.
That would mark the first time oil investment has declined for two years in a row since the mid-1990s.
SEB analyst Schieldrop added there was a “potentially very large impact” on supply in 2018 onwards, arising from the recent cutbacks.
Oil prices also bounded higher this week on news that US oil supplies rose less than expected last week.
The US government’s Department of Energy said Wednesday that commercial crude supplies rose 3.4 million barrels in the week ending October 23.
That was slightly below estimates and brought a whiff of relief to concerns about the global glut.
It also suggested stronger-then-expected demand in the world’s top oil consuming nation.
The price rebound was punctured somewhat after the Federal Reserve signalled Wednesday it could raise rates before the end of the year, expressing optimism for the world’s top economy and oil consumer, after “solid” consumer spending and business investment.
The news sent the euro plunging to $1.0897 — a level last seen in early August.
The stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies. That tends to dampen demand and price levels.
By Friday early afternoon London deals, Brent North Sea crude for December delivery rose to $48.90 a barrel compared with $47.89 one week earlier.
US benchmark West Texas Intermediate for delivery in December increased to $45.82 a barrel compared with $44.86.