Brent Breaks Losing Streak

Oil rose on Monday to break a three-day losing streak, after futures traders increased their bets on a renewed price upswing even though physical markets remain bloated, especially from a relentless rise in US drilling. Brent crude futures rose 23 cents to $48.38 per barrel, while US West Texas Intermediate crude futures gained 17 cents to $46.00 per barrel, Reuters reported.

Traders said the price rises came as data showed speculative traders had increased their investment in crude futures by taking on large volumes of long positions. Brent and WTI futures have lost around 10% in value since May 25, when the Organization of Petroleum Exporting Countries and 11 of its partners extended a restriction on supply into the first quarter of 2018.

"Oil bulls have reset for a technical bounce," said Stephen Schork, founder of energy news and analysis website the Schork Report. While financial traders have confidence in rising prices, the physical market remains under pressure, especially due to a rise in US drilling for new oil production. US drillers added eight oil rigs in the week to June 9, bringing the total count to 741, the most since April 2015, energy services firm Baker Hughes Inc said on Friday. This drive to find new oil has pushed up US output by more than 10% since mid-2016, to 9.3 million barrels per day. The US Energy Information Administration says that figure will likely rise above 10 million bpd by next year, challenging top exporter Saudi Arabia.

Soaring US output undermines OPEC-led efforts to cut almost 1.8 million bpd of production until the first quarter of 2018 in order to prop up prices. Oil prices hit one-month lows last week, as evidence of rising output beyond the United States, in the likes of Libya and Nigeria, added to investor bearishness over supply.