Oil rises towards top of recent trading range as Opec cuts output

Oil rose on Tuesday after exchange data showed hedge funds placing record bets on North Sea and US crude as Opec production cuts tightened supply.

Benchmark Brent futures LCOc1 were up 50 cents at $56.58 a barrel by 0930 GMT (1.30pm Dubai). US light crude CLc1 was up 50 cents at $53.90, having risen by about 0.5 percent in a shortened session on Monday because of a US national holiday.

Money managers now hold the highest volume of net long Brent futures and options on record, InterContinental Exchange data showed on Monday, betting on higher prices to come as Opec and other key exporters reduce production.  

Net long US crude futures and options positions are also at a record high, US data showed on Friday. 

Members of the Organization of the Petroleum Exporting Countries (Opec) and other producers outside the group agreed in November to cut output by about 1.8 million barrels per day (bpd) in an effort to drain a global glut that has depressed prices for more than two years.

So far Opec appears to be sticking to the deal and production has been falling, with speculative investors moving into the market in increasing numbers.

Brent and US crude have both moved towards the top of recent trading ranges, raising some concern that prices could fall quickly if this speculative money leaves the market.

"This prolonged and increasing overcrowding of speculative net longs should be a cause for concern," said Jonathan Chan, an investment analyst at Phillip Futures.

"Should there come a time when these speculative positions decide to unwind, oil prices will be in for a significant correction."

Despite signs that Opec's agreement is holding, inventory levels are still very high in many parts of the world.

US crude oil and gasoline inventories soared to record highs last week as refineries cut output and gasoline demand softened.

More evidence of the state of the US oil market will come on Thursday when the US Department of Energy publishes stocks figures.

Those numbers could be a catalyst for a market move, said Carsten Fritsch, analyst at Commerzbank in Frankfurt:

"Until then, lack of bearish news seems to be enough to push prices higher," Fritsch said.

Shoot

Trending News

Byju’s acquires US-based Osmo for $120 million

Personal care brand Arata Zero Chemicals raises Rs 3.5 crore in seed capital

Etail may lose Rs 40,000 crore, retail to get a 3rd of it

Amazon food biz to log off if new rules remain on menu

Changes to FDI policy unclear, don’t help the cause of startups: Lenskart's Peyush Bansal

Slowdown or not, we are aggressive on US: TCS CEO Rajesh Gopinathan

SpaceX to layoff 10% of workforce

Amazon Pay gets another Rs 300 crore from parent entity

Steadview Capital invests $74M in Ola valuing it at around $6B

Byju’s ups revenue to Rs 490 cr in FY 18, losses drop by half

A Rs 120-cr WhatsApp message to fight fake news

OYO bulks up international leadership with key hires

For Matrix Partners, transaction-based startups mean business

Amazon joins global companies such as Google, WhatsApp and Truecaller that have put their bets on the UPI business in partnership with banks.

Uber looks to double its engineering headcount in India

SoftBank to invest additional $2B in WeWork: Sources

Snapdeal claims to have added 50,000 sellers in last 12 months

Agritech startups Sabziwala and LivLush merge their business under new entity Kamatan

Avail Finance lands $17.2M from Matrix Partners & Ola, Freecharge and Flipkart founders

RBI suggests tax sops, self-regulation to build fintech space

Swiggy hires new CEO for its Access Service, gets new CFO

Logistics company Delhivery registers 44% increase in FY17 revenues

WeWork to acquire one of the oldest social networks, Meetup

Qualcomm rejects Broadcom's $103 billion offer

EasyRewardz gets $2 million Series-A funding

'Anemic' iPhone 8 demand drags Apple shares lower

Lending platform Lenden Club gets Rs 3.5cr in Equity Investment

On festive sales, Flipkart says 65% clients from Tier-II cities