Oil in Longest Rally Since 2012

Oil prices rose for an eighth day on Monday, their longest rally in over five years after data pointed to moderating US output, but analysts said news of rising OPEC production could temper gains.

Brent crude futures were up 19 cents at $48.96 a barrel, having gained 5.2% last week in their first weekly gain in six weeks. The eight-day climb is the longest unbroken rally since February 2012. US crude futures rose 23 cents to $46.27 per barrel, following last week's 7% gain, Reuters reported.

Drilling activity for new oil production in the United States fell for the first time since January, dropping by two rigs, while US government data showed crude output fell in April for the first time this year.

"Sentiment has turned and I think we should be going up in price. I don't think it's going to last, but the momentum at the moment is with the bulls," PVM Oil Associates strategist, Tamas Varga, said.

The drop in US rig count and US Energy Information Administration figures showing output fell by 24,000 barrels per day on a monthly basis "sent out a short-term bullish message", he said.

The oil price is still down 14% so far this year, as strong global demand has not been enough to absorb rising output from the United States, Nigeria, Libya and other locations, such as Brazil and the North Sea.

Despite the dip in US drilling, the total rig count was still more than double the 341 rigs in the same week a year ago, according to energy services firm Baker Hughes Inc.

Oil markets remain oversupplied as output from the Organization of the Petroleum Exporting Countries hit a 2017 high.

June OPEC production was up by 280,000 bpd at 32.72 million bpd, according to a Reuters survey, despite the group's pledge to hold back output.

"To put that in context, that is nearly a quarter of the 1.2 million barrels per day OPEC agreed to cut," said Greg McKenna, chief market strategist at AxiTrader, adding that the rise came from Nigeria and Libya, which are exempted from the cuts.

Last week, money managers added to their bets against a sustained rise in the oil price. US data showed investors increased short holdings of crude futures and options to close at their highest in a year.