Oil rose for a fourth day, the longest run of gains since August, amid speculation reduced investment will curb production.
BP Plc said today it will cut spending by 13 percent after oil slumped. U.S. drillers idled 94 rigs last week, the most in data starting in 1987, according to Baker Hughes Inc. Hedge funds and other speculators held the largest number of short contracts in WTI in four years last week. A U.S. refinery strike, which started Feb. 1, has halted one plant while management has taken control of operations at six others.
Brent crude is poised to enter a bull market after rebounding from a collapse. Prices are down 52 percent since June. Chevron Corp. and Royal Dutch Shell Plc lowered their spending targets for this year as the industry cut more than $40 billion from budgets since Nov. 1. Futures rose as much as 4 percent in New York, extending a 2.8 percent gain yesterday.
"We're rising for a fourth consecutive day as the market corrects after its huge decline," Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. "The BP spending plans are probably putting the focus on the rig count and what that'll mean for future output."
West Texas Intermediate for March delivery rose $1.59, or 3.2 percent, to $51.16 a barrel at 10:29 a.m. on the New York Mercantile Exchange. Futures touched $51.55, the highest level since Jan. 5. WTI closed at $44.45 on Jan. 28, the lowest since March 2009. The volume of all futures traded was 59 percent above the 100-day average for the time of day.
Brent for March settlement climbed $1.35, or 2.5 percent, to $56.10 a barrel on the London-based ICE Futures Europe exchange. That's 20 percent higher than its Jan. 13 close of $46.59, the lowest in almost six years. A gain of 20 percent in closing prices is commonly referred to as a bull market. Volume was about twice the 100-day average. The North Sea crude is heading for the longest stretch of gains since May.
The European benchmark oil grade traded at a $4.94 premium to WTI.
BP expects to cut spending to $20 billion this year, compared with previous guidance of $24 billion to $26 billion. It spent about $23 billion in 2014.
Oil will probably trade from $40 to $60 a barrel for the next three years, BP Plc Chief Executive Officer Bob Dudley said in an interview with Bloomberg Television on Tuesday.