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 U.S. West Texas Intermediate (WTI) crude futures were up 28 cents a
barrel at $42.18 a barrel by 1230 GMT, having fallen by more than 3
percent earlier on a stronger dollar.
Benchmark January Brent futures were up 67 cents at $45.33 a barrel.
"It’s the statement," SEB analyst Bjarne Schieldrop said. "Saudi
Arabia hasn't said they won't cut, but that doesn't mean they are
going to increase production either -- it’s very loose news."
Saudi Arabia has previously said it is willing to cooperate with
other oil producers to maintain oil price stability, but the
comments on Monday arrived as futures prices were barely holding
above 2-1/2 month lows.
Big hedge funds have increased their bets that oil will continue to
fall, according to data from the U.S. Commodity Futures Trading
Commission (CFTC) last week. [CFTC/]
Speculators now hold more positions that are betting on a drop in
the oil price than at any time since at least 2009, according to
Reuters data.
Oil prices have halved over the last 12 months after OPEC decided to
maintain its production levels, or even increase them, to retain
market share, in part by forcing higher-cost producers elsewhere to
cut output.
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Morgan Stanley's commodities research team said they expected to see
a rise in the physical market towards the end of the year, as
refinery margins remain robust and maintenance schedules for next
month are expected to be light.
But this might not be enough to underpin the broader market, they
said.
"As long as markets are oversupplied, even if it's by a shrinking
amount, technical factors and the U.S. dollar will remain the
primary price-setting mechanisms," they said.
(Additional reporting by Meeyoung Cho in Seoul; Editing by William
Hardy)
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