|
 "There were a lot of people on the sidelines waiting for an
opportunity to buy," said Bjarne Schieldrop, chief commodity analyst
at SEB.
"Brent has struggled sideways for a long time but it closed above
the 20-day moving average on Friday for the first time since July,
and the rig count is falling sharply. So now they think, maybe this
is the time to buy."
At 6:49 a.m. ET Brent crude futures were up $2.05 at $55.04 a
barrel, after leaping as high as $55.62 and dipping as low as
$51.41, as the bulls battled with the bears.
U.S. crude was up $1.50 at $49.74 a barrel, after touching an
intraday high of $50.56 and slumping to $46.67.
Both contracts had rallied about 8 percent on Friday, fueled by
month-end short-covering and a record weekly drop in the number of
U.S. oil rigs employed, according to industry data from Baker
Hughes. The count is now down 24 percent from its October peak.
"Most market observers have been surprised by the scale of the
decrease, and expectations of U.S. oil output this year will no
doubt be lowered accordingly," analysts at Commerzbank said in a
note. "The foundation for a steady price recovery in the second half
of the year has thus been laid."
However, in the short term the price increase has been exaggerated,
as there is still considerable oversupply, they added.
Harry Tchilinguirian, head of commodity markets strategy at BNP
Paribas, said the bounce was mainly due to technical factors rather
than any fundamental reason.
"I wouldn't be surprised if this afternoon we sell into (the rally)
because the global fundamentals in oil and the economy haven't
really changed much since last week," he said.
[to top of second column] |
On Sunday, workers at nine U.S. refineries and chemical plants went
on strike in an effort to pressure oil companies to agree to a new
national contract.
"So far only a handful of refineries have been affected, but the
last time they went on strike like this, in 1980, it lasted for
three months," said Ole Hansen, senior commodity strategist at Saxo
Bank.
Last week U.S. crude inventories hit a record high, and any
dampening of refinery demand would likely push stocks higher as the
slowdown in drilling has still not affected U.S. production,
analysts said.
"The market is likely too excited about falling rig counts,"
analysts at Morgan Stanley said in a note on Monday. "The most
productive rigs will likely remain as long as possible."
(Additional reporting by Henning Gloystein in Singapore and Himanshu
Ojha in London; Editing by Dale Hudson)
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