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By Bloomberg

Oil headed for a third weekly advance after rising the most in two months as U.S. crude production slowed from the fastest pace in more than three decades.

Futures were little changed in New York in the last trading day of this week, poised for a gain of 2.4 percent since March 27. U.S. output shrank by 36,000 barrels a day to 9.39 million a day last week, the first drop since January, a government report showed. Iran and world powers extended talks aimed at ending the 12-year standoff over the Persian Gulf country’s nuclear program into an eighth day, with the U.S. indicating progress toward an agreement.

Oil is still down about 6 percent this year in New York after a global supply glut was exacerbated by rising production in the U.S., where inventories expanded further from a record last week. Drillers have idled 762 rigs since December to the fewest in four years after prices fell by almost half in 2014.

“Up until now we seen one straight line from early 2011” in U.S. crude production, Hans van Cleef, an energy economist at ABN Amro in Amsterdam, said by phone on Thursday. “We should see some significant impact on U.S. oil production, whether a significant decline in the growth rate or it doesn’t grow at all, before the end of the year.”

West Texas Intermediate for May delivery traded 8 cents lower at $50.01 a barrel in electronic trading on the New York Mercantile Exchange at 9:34 a.m. London time. The contract climbed $2.49 to $50.09 on Wednesday. Total volume was 38 percent below the 100-day average for the time of day. The exchange will be closed April 3 for the Good Friday holiday.

Crude Supplies

Brent for May settlement declined 11 cents to $56.99 a barrel on the London-based ICE Futures Europe exchange. It increased $1.99 to $57.10 on Wednesday. The European benchmark crude traded at a premium of $6.98 to WTI.

Oil production in the U.S., the world’s biggest oil consumer, surged to 9.42 million barrels a day through March 20, the most in weekly records compiled by the Energy Information Administration dating back to January 1983. The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked shale formations from Texas to North Dakota.

For the week ended March 27, crude inventories rose by 4.77 million barrels to 471.4 million, the Energy Department’s statistical arm reported Wednesday. That’s the highest level since at least August 1982. Stockpiles at Cushing, Oklahoma, the delivery point for WTI contracts and the largest U.S. oil- storage hub, climbed by 2.63 million barrels to a record 58.9 million.

Iran Discussions

The U.S. State Department said late Wednesday that enough progress had been made in meetings between Secretary of State John Kerry and his Iranian counterpart Mohammad Javad Zarif to warrant continuing talks aimed at resolving the 12-year impasse. Iranian Foreign Minister Mohammad Javad Zarif said on Thursday that overnight there was “good progress made but we still don’t have agreement on solutions.”

A deal may lead to the easing of sanctions on Iranian crude exports. The country, a member of the Organization of Petroleum Exporting Countries, could boost shipments by 1 million barrels a day if penalties are lifted, Oil Minister Bijan Namdar Zanganeh said March 16.

“If a deal leads to lower sanctions, which remains to be seen, then that would lead ultimately to even more oil on the market,” said ABN’s Van Cleef. “The pressure on non-OPEC countries to balance the market will increase even further. The downside risk for prices in the next two to three months is much bigger than the upside.”