Oil Gains on Hopes for Falling Stocks

Reuters

U.S. benchmark West Texas Intermediate (WTI) prices were trading 1.23 per cent higher at $43.54 per barrel this morning.

The market is up slightly so far this week after dropping for the past five weeks.

Traders and analysts said there was little fundamental news to justify more of a bounce in oil prices.

"It has moved a long way in response to that news".

Oil in NY and London tumbled into a bear market last week on concerns that expanding global supply will counter the impact of output cuts from the Organisation of Petroleum Exporting Countries and its partners including Russian Federation.

Essar Oil's oil imports from Iran in May also rose 19.1 percent compared with April to about 186,600 barrels per day (bpd), according to tanker arrival data obtained from trade sources and ship-tracking services on the Thomson Reuters terminal.

News from other markets show, an increase of 63 cents to $15.42 was observed in shares of Home Capital Group.

Oil settled higher Monday, tallying their third straight session of gains, despite ongoing pressure from expectations of further growth in USA output.

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However, he warned, "I'll tell you one thing: in the long run, crude oil is heading egregiously lower". The global benchmark crude traded at a premium of US$2.56 to WTI. Shale producers in the U.S. Permian basin will be able to make money even if the price falls to the mid-$20s, according to Scott Sheffield, chairman of Pioneer Natural Resources Co.

Analyst Merrill Lynch said that the demand had not grown enough to take in the excess output. Further underscoring the weakness in the oil patch are the following data points. West Texas Intermediate crude was trading at $44.25, up 87 cents, or 2 percent.

Figures of USA crude inventory are expected later today, which could determine if the market's gains stand to extend further.

"Three days of price action has been interesting, it has been short covering", said Ric Spooner, chief market analyst at CMC Markets in Sydney.

"Exchange data showed that speculators had cut their net long positions in WTI and Brent to its lowest level in 10 months last week", ANZ said in a note.

The gains had additional support from bargain hunters who stepped in after crude futures. Brent advanced 0.6 %to $45.83 on Monday.

The commodity has fallen almost 20 percent year to date, the biggest first-half slide in 20 years, according to Reuters. "I don't think OPEC is going to cut deeper, at least not for now".

"After how much we've fallen, prices are attractive here as a result, so it's not surprising that we're getting some buying, just on a valuation perspective". Non-OPEC nations must also cut production in order to reverse the supply glut. In the last week, there was an increase of 11 operating rigs in the United States, pushing the total number to 758, the highest since April 2015.

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