Crude-oil futures carved out modest gains in Asia on Tuesday, but most investors are holding back bets until further drivers emerge.
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Bargain-hunting and a technical rebound have aided the market so far this week after having fallen each of the prior 5. The general mood is still bearish as global inventories remains elevated and output from the likes of the U.S., Libya and Nigeria occurs at full-steam.
Helping pressure oil futures this month has been weekly U.S. inventory and production data. For Wednesday's government release, some are forecasting declines in both after a tropical system in the Gulf of Mexico forced some oil rigs and platforms to shut down temporarily last week.
"The market has become extremely data sensitive. We might see a significant pop in short-covering if the U.S. inventory data turns out to be bullish," said Ric Spooner at CMC Markets.
For three years, the oil markets have been slammed with a deluge of supplies. For the bulk of that period, Middle Eastern and Russia producers pushed their output to the limit in a bid to drown out U.S. shale competitors.
However, the upstarts turned out to be more agile than expected. Instead of pushing them out of business, it made them operate much-more efficiently and survive the low-price environment.
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In response, the Organization of the Petroleum Exporting Countries and others including Russia late last year agreed to pull back their output by an amount equal to 2% of daily global production. But stockpiles remain well above the five-year average the cuts are stated to get back to and oil futures are down 19% in 2017.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August recently traded up 0.3% at $43.49 a barrel in the Globex electronic session. August Brent on London's ICE Futures exchange rose 0.3% to $45.97.
"A bottom in the oil price is likely near," said Citi, pointing out that long positions for both oil benchmarks nearly January 2016 levels, when oil bottomed. "That's not to say that investor net length can't go lower, but we think this is unlikely, especially given how short-lived aggressive short-selling has been in oil markets historically."
Mr. Spooner added production in Libya and Nigeria might also be approaching a peak because of limited investment, an opinion echoed back many other market watchers.
Refined products also rose Tuesday. Nymex reformulated gasoline blendstock for July gained 0.4% to $1.44 a gallon, August diesel gained 0.3% to $1.3910 and July ICE gasoil rose 0.7% to $412.50 a metric ton.
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(END) Dow Jones Newswires
June 26, 2017 23:50 ET (03:50 GMT)