Oil prices up despite growing number of U.S. drilling rigs

Andrew Cummings
June 26, 2017

Extreme bearishness extends to refined fuels, where hedge funds have a net short position of 27 million barrels in US heating oil and a near-record net short position in USA gasoline of 21 million barrels.

Brent crude futures were up 50 cents, or 1.1 percent, at $46.04 per barrel at 0215 GMT.

Hedge funds have embarked on a new cycle of short-selling in Brent and WTI, the eighth since the start of 2015, which has added to the downward pressure on prices.

US oil production rose by 20,000 barrels a day last week to 9.35 million, the Energy Information Administration reported Wednesday.

Baker Hughes on Friday said USA drillers added 11 oil rigs this week, the biggest increase in three weeks.

The U.S. rig count rose by 11 to 758, extending a year-long drilling recovery to the highest level since April 2014, implying that further gains in domestic production are ahead.

Oil prices rose early on Monday on a weaker dollar, but increased United States drilling activity stoked worries that a global supply glut would persist despite efforts by some producers to curb output.

In May, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018.

"It is just the fact that the oil market stopped falling".

But crude supplies in the USA, which is not part of the Opec-led deal, have been dampening the impact of curbs.

Meanwhile, traders will also continue to pay close attention to comments from global oil producers for evidence that they are complying with their agreement to reduce output this year.

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