Crude oil prices extend bounce off 10-month lows

Crude oil prices extend bounce off 10-month lows

Crude oil futures were largely unchanged in the early trade in Asian markets on Tuesday as the oil markets took a 3-day gain with supply glut weighing in oil prices.

Brent crude futures, the worldwide benchmark for oil prices, gained $1.01 or 2.2 percent to $46.84 per barrel by 11:49 a.m. EDT (1549 GMT). Brent crude futures were up 11 cents at $46.65 per barrel by 1133 GMT, on track for a near 20 percent drop in the first half of the year.

Economic momentum could spur demand, which has emerged as a lead indicator for oil prices, with USA figures on gasoline inventory levels offering a clue on consumer sentiment.

Another factor is that even with higher production from the U.S.as well as Nigeria, Libya, and other countries, "we're down about 1.6 million barrels per day over the last six month; sure, that's short the 1.8 [million barrels that the Organization of the Petroleum Exporting Countries had hoped for], but I think that's a material improvement and I do think OPEC is getting its way".

Despite the cuts, which started in January, markets remain well supplied due to rising output elsewhere.

News from other markets show, an increase of 63 cents to $15.42 was observed in shares of Home Capital Group.

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And U.S. shale oil output has risen around 10 percent since last year, with the number of U.S. oil rigs in operation at the highest in more than three years.

Analysts said the oil ETFs could suffer bigger losses down the road as some watchers predict worldwide oil prices to plunge to the $30-per-barrel range due to concerns over a supply glut.

Analysts at Bank of America-Merrill Lynch said demand was not growing quickly enough to absorb output, especially since imports in Asia are stuttering. "It is just the fact that the oil market stopped falling". The benchmark was still set to end the first half of the year down almost 20 percent.

Almost six months through the OPEC / NOPEC production cut, and it is very much still a case of whack-a-mole for the various players: one month they duck lower, only to poke their head higher the next month. Data from ICE Futures Europe on Monday showed that speculators cut net-long positions in Brent by 54,162 contracts to 228,995, the lowest in 17 months. "The market is taking a breather here before we take a next move, which I think will be lower". In the last week, there was an increase of 11 operating rigs in the U.S., pushing the total number to 758, the highest since April 2015. We do not have to look too far for likely culprits on the supply side.

"Looking into the second half of 2017, we now doubt that demand growth will accelerate sufficiently", they wrote.

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