Oil Prices Tick Up, But Sentiment Remains Cautious
June 27 2017 - 12:05AM
Dow Jones News
By Jenny W. Hsu
Crude-oil futures carved out modest gains in Asia on Tuesday,
but most investors are holding back bets until further drivers
emerge.
Bargain-hunting and a technical rebound have aided the market so
far this week after having fallen each of the prior 5. The general
mood is still bearish as global inventories remains elevated and
output from the likes of the U.S., Libya and Nigeria occurs at
full-steam.
Helping pressure oil futures this month has been weekly U.S.
inventory and production data. For Wednesday's government release,
some are forecasting declines in both after a tropical system in
the Gulf of Mexico forced some oil rigs and platforms to shut down
temporarily last week.
"The market has become extremely data sensitive. We might see a
significant pop in short-covering if the U.S. inventory data turns
out to be bullish," said Ric Spooner at CMC Markets.
For three years, the oil markets have been slammed with a deluge
of supplies. For the bulk of that period, Middle Eastern and Russia
producers pushed their output to the limit in a bid to drown out
U.S. shale competitors.
However, the upstarts turned out to be more agile than expected.
Instead of pushing them out of business, it made them operate
much-more efficiently and survive the low-price environment.
In response, the Organization of the Petroleum Exporting
Countries and others including Russia late last year agreed to pull
back their output by an amount equal to 2% of daily global
production. But stockpiles remain well above the five-year average
the cuts are stated to get back to and oil futures are down 19% in
2017.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in August recently traded up 0.3% at $43.49 a barrel
in the Globex electronic session. August Brent on London's ICE
Futures exchange rose 0.3% to $45.97.
"A bottom in the oil price is likely near," said Citi, pointing
out that long positions for both oil benchmarks nearly January 2016
levels, when oil bottomed. "That's not to say that investor net
length can't go lower, but we think this is unlikely, especially
given how short-lived aggressive short-selling has been in oil
markets historically."
Mr. Spooner added production in Libya and Nigeria might also be
approaching a peak because of limited investment, an opinion echoed
back many other market watchers.
Refined products also rose Tuesday. Nymex reformulated gasoline
blendstock for July gained 0.4% to $1.44 a gallon, August diesel
gained 0.3% to $1.3910 and July ICE gasoil rose 0.7% to $412.50 a
metric ton.
Write to Jenny W. Hsu at jenny.hsu@wsj.com
(END) Dow Jones Newswires
June 26, 2017 23:50 ET (03:50 GMT)
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