Oil Prices Up but Mood Is Still Down
June 26 2017 - 1:27PM
Dow Jones News
By Alison Sider and Neanda Salvaterra
Crude futures wavered between gains and losses on Monday, as
investors weighed the relentless growth in U.S. oil output against
efforts by major global producers to reduce supply.
U.S. crude futures for August delivery were recently up 31
cents, or 0.72%, at $43.32 a barrel on the New York Mercantile
Exchange. Brent, the global benchmark, rose 21 cents, or 0.46%, to
$45.75 a barrel on ICE Futures Europe.
The move higher reversed the declines in earlier trading.
Bargain hunters have stepped in at times after crude futures
slipped into a bear market last week.
"Sentiment is too bearish and the market is very vulnerable to a
short covering rally," the Chicago brokerage iiTrader wrote to
clients in a note Monday. "We remain fundamentally longer-term
bearish, but in the near term this market is very susceptible to
rallies."
Analysts at Commerzbank said oil's move higher was likely a
"technical countermovement" after U.S. oil prices hit a 10-month
low and global prices hit a seven-month low last week.
"The news remains negative," the analysts wrote.
The faith investors had at the beginning of the year that oil
prices would climb higher has all but evaporated. Last week, hedge
funds and other money managers piled into new bets on falling
prices, according to the Commodity Futures Trading Commission.
"This puts investor optimism at its lowest level since August
2016," the Commerzbank analysts wrote.
The Organization of the Petroleum Exporting Countries and a
handful of nations outside the cartel have cut global supply by
about 2%. But since the beginning of the year, investors have grown
concerned that rising output in OPEC members exempt from the deal,
such as Libya and Nigeria, and outside producers including the
U.S., has undercut the oil cartel's efforts.
The latest data from oil-services firm Baker Hughes Inc. showed
U.S. shale producers added 11 more rigs, marking the 23rd weekly
rise and the longest streak of increases in decades.
"Adherence to quotas has thus far been impressive but the impact
of such has been offset by virtually uninterrupted gains in shale
production and increases within other non-OPEC regions that have
helped to slow our expected contraction in the U.S. crude supply
surplus against the averages," Jim Ritterbusch, president of
Ritterbusch & Associates, wrote in a research note.
Gasoline futures rose 0.36 cent, or 0.25%, to $1.4377 a gallon.
Diesel futures rose 0.79 cent or 0.58%, to $1.3796 a gallon.
Write to Alison Sider at alison.sider@wsj.com and Neanda
Salvaterra at neanda.salvaterra@wsj.com
(END) Dow Jones Newswires
June 26, 2017 13:12 ET (17:12 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.