Supported by U.S. Drilling Slowdown, Oil Rises
Crude futures rose on Monday, but closed well below intraday peaks, as concerns about Iran and turmoil in Yemen supported prices, while the global supply glut continued to cap gains.
Also supportive to crude, U.S. diesel futures rose on news that Colonial Pipeline shut on Sunday its distillate pipeline running from Texas to North Carolina after a breach.
Brent May crude rose 6 cents to settle at $57.93 a barrel, having swung between $57.46 and $59.54.
U.S. crude rose 27 cents to settle at $51.91, well off its $53.10 peak just below its 100-day moving average at $53.18. It was last above that key technical level in July 2014.
Iran on Monday urged the formation of a new Yemeni government, comments likely to anger fellow OPEC member Saudi Arabia, which is backing Yemen's president against a rebel force allied with Iran.
U.S. Secretary of State John Kerry raised concerns with his Russian counterpart over Russia's decision to lift a ban on missile deliveries to Iran, the White House said on Monday.
Later, the State Department said U.S. officials do not think Russia's decision to deliver a missile system to Iran would affect the major powers' unity in ongoing nuclear talks.
Weak export data from China raised concerns about the economy of the world's No. 2 oil consumer but also fueled hopes for economic stimulus along with data that showed China's crude oil imports were up 14 percent in March versus a year ago, though imports fell from February.
"Another case of bad news possibly being good news, since more stimulus for China would lead to more demand," said Phil Flynn, analyst at Price Futures Group in Chicago.
Government projections that oil production from the fastest-growing U.S. shale plays is set to fall only about 45,000 barrels per day in May from April, helped limit crude oil's gains.
The market opened with momentum from Friday's strong finish on news that the number of U.S. rigs drilling for oil posted the largest decline in a month.
"The complex was able to maintain upward momentum with the assistance of Friday's larger than expected rig count reduction," said Jim Ritterbusch, president at Ritterbusch & Associates.
Also supportive was news on Monday that speculators in Brent futures and options raised net long positions to the highest level since July 2014.
(By Robert Gibbons; Additional reporting by Himanshu Ojha in London and Henning Gloystein in Singapore; Editing by Ted Botha and Marguerita Choy)