Oil prices surged Tuesday after reports of significant cyberattacks on global businesses, including a shipper and a Russian oil giant.
Light, sweet crude for August settled up 86 cents, or 2%, at $44.24 a barrel on the New York Mercantile Exchange. Brent gained 82 cents, or 1.8%, to $46.65 a barrel on ICE Futures Europe. Both made their largest daily gains in the past month.
Continue Reading Below
The market had already been getting a boost from bargain hunters and momentum from recent trading sessions. Prices are up for four straight sessions now, more than 4% since they hit their low point of the year on Wednesday. It is the longest winning streak in a month.
Gains accelerated amid growing reports that computer systems at businesses, including shipping giant A.P. Moeller-Maersk A/S, advertising firm WPP Group PLC and Russian oil company PAO Rosneft, had been hacked. The state-controlled oil company said it was under a "massive hacker attack" that could have serious consequences but said its oil production hadn't been affected.
But there will likely be a lot of skepticism about that claim that production isn't affected, brokers said. And even just the risk of it is likely enough to halt what has become an aggressive bet against prices coming from speculative traders, those brokers said.
"If all of a sudden production starts getting shutdown...it's hard to bring it back up, regardless of the reason," said Scott Shelton, broker at ICAP PLC.
The timing of the news probably added to the speed of the rebound, which was briefly among the biggest daily gains of the year, brokers said. The market could be vulnerable to a snap back up because of how crowded the trade betting on lower prices had become.
For several weeks, money managers have piled into bearish positions on U.S. oil, which reached their highest point in nearly 11 months a week ago, according to data from the Commodity Futures Trading Commission. Their bullish positions outnumber their bearish positions by the smallest amount since Aug. 9.
When trades get that crowded, they can become prone to a reversal. Because so few traders may be left to take the opposite side of the trade, it can cause bids to rise quickly if something happens to trigger many sellers to stop -- or to close out bearish bets by buying back contracts they had sold -- at once.
And traders will find reports of cyberattacks "unsettling," said Ric Navy, senior vice president for energy futures at brokerage R.J. O'Brien & Associates LLC. "Whenever things like these happen, it makes sellers more cautious. They step aside."
Despite the timing of the attack reports and oil's rise, others did doubt a connection. Other unknown factors, or even forecast declines in both stocks and supply in the official U.S. data due Wednesday, could have been the spark for a reversal. A tropical system in the Gulf of Mexico forced some oil rigs and platforms to shut down temporarily last week, and some traders may also be opting to stop selling or close out bearish bets ahead of a government report Wednesday on U.S. stockpiles.
"Seasonally you expect a draw, and I guess there's been so much focus on supply, and now you're doing something that's seasonally normal...I guess that's supportive," said Michael Hiley, a trader at LPS Futures LLC. "It's just a lot of position management."
The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed an 800,000-barrel increase in crude supplies, a 1.4M-barrel rise in gasoline stocks and a 700,000-barrel increase in distillate inventories, according to a market participant.
Gasoline futures gained 2.11 cents, or 1.5%, to $1.4598 a gallon. Diesel posted their fourth-straight winning session, gaining 3.35 cents, or 2.4%, to $1.4137 a gallon.
David Gauthier-Villars, Michael Amon, Neanda Salvaterra and Jenny W. Hsu contributed to this article.
Write to Timothy Puko at email@example.com
(END) Dow Jones Newswires
June 27, 2017 17:13 ET (21:13 GMT)