Burst in investor confidence
in oil pushes up prices
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[June 12, 2017]
By Amanda Cooper
(Reuters) - Oil rose on Monday to break a three-day losing streak, after
futures traders increased their bets on a renewed price upswing even
though rising U.S. drilling helped keep physical markets bloated.
Brent crude futures were up by 85 cents at $49.00 per barrel by 1150
GMT, after hitting a session high of $49.15. U.S. West Texas
Intermediate (WTI) crude futures <CLc1> rose 74 cents to $46.58 per
barrel, shy of the day's high of $46.69.
Traders and analysts said the bounce looked technical in nature, after
WTI rallied and encouraged a similar move in the Brent market. But they
said the move might prove fleeting.
"When you start to approach $45 a barrel in WTI, you're in an area where
you do find some price support and I think there has been some evidence
last week of investment flows coming back into crude oil," Petromatrix
strategist Olivier Jakob said.
"You have to be careful not to be too optimistic for now," he said.
"Physical differentials are still under pressure and the time structure
is still under pressure in Brent. It's a bit premature to call for much
higher oil prices."
Traders said the price rises came as data showed speculative traders had
increased their investment in crude futures by taking on large volumes
of long positions.
"Oil bulls have reset for a technical bounce," said Stephen Schork,
author of the Schork Report.
While financial traders have confidence in rising prices, the physical
market remains under pressure, especially due to a rise in U.S.
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A pumpjack brings oil to the surface in the Monterey Shale,
California, April 29, 2013. REUTERS/Lucy Nicholson/File Photo
drillers added eight oil rigs in the week to June 9, bringing the total count to
741, the most since April 2015, energy services firm Baker Hughes Inc said on
output has risen by more than 10 percent since mid-2016, undermining OPEC-led
pledges to cut almost 1.8 million bpd of production until the first quarter of
The oil price slid to one-month lows last week as evidence of rising output in
Libya and Nigeria, two OPEC members excluded from the cuts, added to investor
concerns about excess supply.
"With the typically tighter second half of the year fast approaching, rumors of
oil prices having found their bottom are doing the rounds," PVM Oil Associates
analyst Stephen Brennock said in a note.
"Yet such claims are premature as lingering doubts that prolonged OPEC curbs
will drain the oil glut along with the simultaneous uptick in U.S., Libyan and
Nigerian output make for a bearish cocktail," he wrote.
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson
and Edmund Blair)
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