Oil Prices Climb as Production Capacity Falls

Oil prices rose Monday on expectations that crude’s yearlong price rout will continue to lower U.S. production.

On Friday, oil-services company Baker Hughes Inc. reported a drop in the number of rigs drilling for oil in the U.S., the third-straight weekly decline. That demonstrates how producers are making more efforts to cut back supply following the downturn in prices.

U.S. crude production has fallen from a peak of 9.6 million barrels a day in April to 9.1 million barrels a day in August, according to the latest estimates from the U.S. Energy Information Administration. The agency expects production to hit a low of 8.6 million barrels a day in mid-2016.

“The incipient decline of production in the U.S. in particular will herald in a long-term and fundamental bottoming out process on the oil market,” analysts at Commerzbank wrote in a report. by Georgi Kantchev & Nicole Friedman, Wall Street Journal)

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