Crude oil prices settled higher in futures market on Monday, as investors weighed the relentless growth in US oil output against efforts by major global producers to reduce supply.
U.S. West Texas Intermediate (WTI) crude futures were up 39 cents at $43.76 per barrel.
Oil tumbled into a bear market last week on concerns that expanding global production will counter output cuts from OPEC and partners including Russian Federation.
Oil prices rose more than 1 per cent early on Monday on a weaker dollar, but another rise in United States drilling activity stoked worries that a global supply glut will persist despite an OPEC-led effort to curb output.
"The possibility that USA refinery utilization may have likely peaked this calendar year, when combined with rising output, points to the prospect of higher crude-oil inventories", Geoffrey Craig, oil futures editor S&P Global Platts, wrote in a note late Monday. Prices pared gains after hours when an industry group's reported an unexpected rise in U.S. crude inventories. "I suspect short covering", said Ric Spooner, chief market analyst at CMC Markets in Sydney.
"The market has fallen a lot as the news has been bad pretty consistently for the oil market".
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Commerzbank said in a research note that long positions in Brent on ICE are "at their lowest level in a year and a half", while short positions "have soared to a new record high, having increased more than four-fold since the beginning of the year". Speculators cut their net-long position in USA benchmark futures to the lowest in 10 months last week, and in North Sea Brent to the lowest since January 2016, exchange data showed. The benchmark was still set to end the first half of the year down almost 20 percent.
"Oil may be close to the bottom but badly damaged sentiment and a rising (U.S.) rig count will dent the recovery", US bank Citi said on Tuesday.
OPEC delegates said the cartel will not rush into making a further cut in output or end some countries' exemptions from output limits, although a meeting in Russian Federation next month is likely to consider further steps.
Commodity Futures Trading Commission data on Friday showed money managers cut their net-bullish positions on WTI to the lowest in 10 months during the week ended June 20 and boosted wagers on falling prices.
"On a speculative basis it's arguably worth going long here and playing for a bounce", Kilduff said. 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 USA, pushing the total number to 758, the highest since April 2015.
"Looking into the second half of 2017, we now doubt that demand growth will accelerate sufficiently", they wrote.