Oil prices inched up Monday with talk of production curbs in Libya and Nigeria and a sign of shrinking U.S. stockpiles leading to a small rebound from a recent slide.
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Light, sweet crude for August delivery settled up 17 cents, or 0.4%, at $44.40 a barrel on the New York Mercantile Exchange, its 10th gain in 12 sessions. Brent crude, the global benchmark, gained 17 cents, or 0.4%, to $46.88 a barrel on ICE Futures Europe. Both had been in losses until the traditional start of U.S. trading hours.
Prices flipped to gains -- and stayed there about the rest of the day -- after data provider Genscape said stockpiles at Cushing, Okla., shrank by 2.1 million barrels from June 30 to July 7, according to a person who had reviewed the report. Cushing is the delivery point for the benchmark U.S. West Texas Intermediate oil contract and is often regarded as a key point for judging supply and demand trends.
But the market is also likely simply rebounding from last week's sharp fall, said Ric Navy, senior vice president for energy futures at brokerage R.J. O'Brien & Associates LLC. It dropped 6% in just three sessions to end the week, a steep fall that might lead bearish traders to close out winning positions and take profits.
"Nothing has structurally changed and as such today's gain in prices can only be categorized as light profit-taking buying," said Dominick Chirichella, an analyst at the Energy Management Institute, in a note Monday afternoon. "The market looks more likely to make a pass at testing the low for the year hit on June 21 rather than embarking on a sustained uptrend."
Oil prices went into a hard retreat last week in part tied to data showing another production growth spurt in the U.S. It had restarted the downward momentum that has derailed a widely-expected rally since early March, brokers said.
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Part of the selloff has come from U.S. Energy Information Administration data last week that showed U.S. production increased to nearly 9.34 million barrels a day, up from 9.25 million barrels a day the week prior. Production was up nearly 11% from a year ago and nearly back at its 10-month high. Friday's updated rig count from Baker Hughes Inc. also pointed to production increases. Oil producers added seven more rigs to their working fleet, rising to 763, more than double the 351 at work a year ago.
"We might be getting some bullish sentiment in November, but that's several months of pain for bulls because we see these U.S. numbers and rig count numbers go up every week," said Hamza Khan, head of commodity strategy at ING Bank.
The Organization of the Petroleum Exporting Countries is considering putting a cap on how much oil members Nigeria and Libya can pump, cartel delegates said. Due to internal political unrest, The two countries have been exempt from OPEC's production-cut deal, which has been extended through to next March. The production limits could be voted on again when the organization meets on Nov. 30 in Vienna.
But the oversupply threat is so severe, mere talk of supply caps there hasn't been enough to change momentum, Mr. Navy said. Libya's crude-oil output has surged to more than one million barrels a day, up from 400,000 in October, while Nigeria's output has risen to 1.6 million barrels a day, up from 200,000 barrels a day in October, according to JBC, a Vienna-based energy-industry consultancy.
"It just gives you another selling opportunity. I'm still expecting lower lows," Mr. Navy added. "The market hasn't really proven itself yet to get into rally mode."
Gasoline futures gained 0.23 cent, or 0.2%, to $1.5007 a gallon, the eighth gain in 10 sessions. Diesel futures gained 0.54 cent, or 0.4%, to $1.4536 a gallon, 10th gain in 12 sessions.
--Justin Yang and Biman Mukherji contributed to this article.
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(END) Dow Jones Newswires
July 10, 2017 17:13 ET (21:13 GMT)