Futures in New York were up about 1 percent after tumbling 9.6 percent last week. Prices are near $60 a barrel after data showed last week that American drillers raised the number of rigs exploring for oil to the highest since April 2015. That’s raising fears that a gain in U.S. output will undermine OPEC’s efforts to clear a glut. Hedge funds scaled back bets on rising West Texas Intermediate crude by the most since August.
Last week’s tumble means crude has lost this year’s gains, after a global equity rout spread to commodities and as the U.S. pumps out record volumes. Meanwhile, a weaker dollar that had driven oil’s advance in January has been rebounding this month, adding to weakness in prices. American drillers remain the biggest challenge to the Organization of Petroleum Exporting Countries and its allies as they curtail output to prop up prices.
“Oil is paying the price for rising too quickly to levels that attracted increased U.S. production,” said Ric Spooner, an analyst at CMC Markets in Sydney. “Traders are also nervous about recent financial market volatility and the stronger dollar.” WTI oil could fall to “the low $50s range if volatility persists,” he said.
WTI for March delivery added 61 cents to $59.81 a barrel on the New York Mercantile Exchange at 8:01 a.m. in London. The contract slid $6.25 last week to close at $59.20, the lowest level since Dec. 22. Total volume traded was about 31 percent above the 100-day average.
Brent for April settlement was at $63.37 a barrel on the London-based ICE Futures Europe exchange, up 58 cents. Prices dropped $5.79, or 8.4 percent, to settle at $62.79 last week. The global benchmark crude traded at a $3.77 premium to April WTI.
The U.S. oil rig count rose by 26, the most in a year, to 791 last week, Baker Hughes data showed on Friday. American weekly crude output topped 10 million barrels a day for the first time on record, and the government forecasts it will skyrocket to 11 million later this year. That means the U.S. is now a top producer of the same caliber as Saudi Arabia and Russia.
Hedge funds reduced their WTI net-long position -- the difference between bets on a price increase and wagers on a drop -- by 4.7 percent to 472,792 futures and options during the week ended Feb. 6, according to the U.S. Commodity Futures Trading Commission. Longs declined by 4.1 percent. Shorts rose for a fourth week. Total positioning shrank the most in three months.
Other oil-market news:
- Oil investors rattled by the threat of U.S. output can find some cheer from diesel demand in Asia. While the risk of a crude glut looms, refineries being shut for spring-season maintenance is set to squeeze diesel supplies in the Asian market at a time when demand is being boosted by healthy economic growth.
- After a wait of about a quarter of a century, the world’s biggest oil buyer is finally getting its own crude-futures contract. In a challenge to the dollar-denominated Brent and WTI markers, China will list yuan oil futures in Shanghai on March 26.