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Delayed Quote. Delayed  - 06/23 11:00:00 pm
43.14 USD   +0.72%
02:20aDJOil Prices Up as Bigger Producers Stick to Cuts
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06/23DJOil Prices Up as Bigger Producers Stick to Cuts
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Oil Prices Up But Still Near Four-Month Low

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03/21/2017 | 05:17am CEST
   By Jenny W. Hsu 
 

Crude futures rebounded in early Asia trade Tuesday but continued to hover around a four-month low, weighed by strong inventories and accelerating production in the U.S.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in April last traded up $0.18, or 0.37%, at $48.83 a barrel in the Globex electronic session. May Brent crude on ICE Futures Europe gained $0.25, or 0.48%, to $51.78 a barrel.

Oil prices have slumped more than 10% year-to-date, dragged lower by rising shale-oil production and inventories in the U.S., which have nearly wiped out all the gains reaped since the Organization of the Petroleum Exporting Countries and Russia last year consented to cut 1.8 million barrels of their daily production in the first half of 2017.

The prospect of a still-oversupplied market has prompted oil bears to flee. In the week ended March 14, speculative short positions in WTI crude futures held by money managers almost doubled to 128,947 contracts, based on data from the U.S. Commodity Futures Trading Commission.

"The switch from long to short positions shows that fund managers are losing confidence in the OPEC deal," said Jonathan Chan, an analyst at Phillip Futures.

The recent selloff has reduced downside risks and opened the door wider for bargain-hunters to push prices up, but appetite for oil is expected to stay weak in the near term, said Tim Evans, a Citi Futures analyst.

"We don't think money managers will be so quick to rebuild the record long position from Feb. 21 all that soon," he said.

A major factor behind the bearish sentiment is the recovery in U.S. shale production after a two-year lull. Latest data showed U.S. output remained above 9 million barrels for the past four weeks while inventories rose to 528.2 million barrels. This means the U.S. increased its output by 412,000 barrels a day since the OPEC-Russia was signed, based on S&P Global Platts calculation.

S&P Global Platts said it expects U.S. crude stocks to balloon by another 2 million barrels in the week ended March 17. If official data from the Energy Information Administration due Wednesday show a rise, it would be the 10th consecutive weekly increase.

Rising production elsewhere is also weighing on prices. Libya's state-owned National Oil Corp. reportedly said loading at its two major oil ports is set to resume following recent conflicts with local insurgents, Reuters reported.

Strong flow oil from the U.S. and Africa could encourage OPEC to extend the agreement beyond the initial six-month period, but if Russia bails, the deal could flop, said Stuart Ive, a client manager at OM Financial.

Nymex reformulated gasoline blendstock for April--the benchmark gasoline contract--rose to $1.6196 a gallon, while diesel traded higher at $1.5226.

ICE gasoil for June changed hands at $458.00 a metric ton, down $0.50 from Monday's settlement.

Write to Jenny W. Hsu at [email protected]

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(MORE TO FOLLOW) Dow Jones Newswires

03-21-17 0016ET

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