Oil Prices Rise Ahead of Data on Drilling Activity

Oil Prices Rise Ahead of Data on Drilling Activity

Rising dollar is pressuring oil prices

The number of oil drilling rigs has declined for 17 consecutive weeks and stood at 802 last week, half of what it was just six months ago.

By

NICOLE FRIEDMAN And GEORGI KANTCHEV/WSJ

Updated April 10, 2015 9:52 a.m. ET

Oil prices rose Friday ahead of closely watched U.S. drilling data and amid uncertainty about Iranian nuclear negotiations.

Light, sweet crude for May delivery climbed 50 cents, or 1%, to $51.29 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose $1.11, or 2%, to $57.68 a barrel on ICE Futures Europe.

The moves capped a volatile week of trading, as investors continued to assess the global glut of oil that sent prices plunging in 2014. Both contracts were on track to post a weekly gain.

The market is currently oversupplied by between one and two million barrels of oil a day, analysts estimate, but many expect production to begin falling this month or later in the quarter as spending cuts begin to take their toll.

Oil-field-services firm Baker Hughes Inc. will release its weekly U.S. oil rig count Friday at 1 p.m. EDT. The number of oil-drilling rigs has declined for 17 straight weeks and stood at 802 last week, half of what it was just six months ago. The rate of decline, however, has slowed in recent weeks while oil production in the U.S. has been resilient.

“Today’s data could offer some support to the market in keeping [U.S. oil prices] elevated above the $50 mark,” said energy-advisory firm Ritterbusch & Associates in a note.

Traders eyed geopolitical uncertainties, including unrest in the Middle East and a potential final deal over Iran’s nuclear program.

In his first public comments after last week’s agreement on a framework for a nuclear deal, Iran’s supreme leader Ayatollah Ali Khamenei said Thursday that the U.S. and its negotiating partners must lift all sanctions on his country immediately after a final deal is signed. The West has been demanding a phased repeal of the penalties, conditional on Iran’s continuing compliance.

Oil markets are tracking the negotiations because a deal could pave the way for more Iranian crude flooding the already oversupplied global market. Analysts estimate that if sanctions are lifted, Iran could add between 0.5 million and 1 million barrels a day to the global market.

“The USA and [European Union] are unlikely to accede to Khamenei’s demand,” saidCommerzbank in a note. “It once more seems doubtful whether a final settlement of the nuclear dispute will be reached by midyear, making a lifting of the sanctions before year-end questionable.”

Gasoline futures rose 2.5% to $1.8028 a gallon. Diesel futures rose 2.2% to $1.7644 a gallon.

Write to Nicole Friedman at nicole.friedman@wsj.com and Georgi Kantchev atgeorgi.kantchev@wsj.com