Crude prices rose for a second consecutive session Monday amid a supply disruption in Nigeria and as major producers said their deal to cut output is working.
U.S. crude futures rose 25 cents, or 0.55%, to $46.08 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 14 cents, or 0.29%, to $48.29 a barrel on ICE Futures Europe.
The move higher comes after prices fell nearly 4% last week. Investors have become more skeptical that efforts by the Organization of the Petroleum Exporting Countries and other major exporters are working off a global oil glut. Prices tumbled sharply last Wednesday after U.S. data showed an unexpected increase in the amount of crude in storage.
But Saudi Arabia's energy minister said that he expects global oil stockpiles to fall more quickly in the coming months. Saudi Energy Minister Khalid al-Falih said Monday that he is "fairly confident that the market rebalancing, which is already under way, will accelerate."
Michael Hiley, a trader at LPS Futures LLC, said a flurry of options trading late last week could be a sign that speculative investors are dipping their toes back into the market.
"A few hedge funds may be trying to bottom pick," he said.
Other factors boosting prices Monday include escalating tensions in the Middle East, a disruption in supply from Nigeria and a weaker U.S. dollar.
Last Friday, Nigeria reported a pipeline leak which could reduce oil exports. JBC Energy analysts estimate that "a good portion of the 205,000 b/d planned for June will be shut in."
"We have had the Nigeria outage return. The market is factoring in a little bit of disruption," said Miswin Mahesh, an oil market analyst at Energy Aspects.
The prospect of rising production from Nigeria has weighed on prices at times in recent months. Nigeria is exempt from an agreement struck by the Organization of the Petroleum Exporting Countries and other major producers to cut output by 1.8 million barrels a day.
A softer U.S. dollar may also have supported prices. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, fell 0.1% on Monday. Oil is priced in dollars and as the greenback wanes in strength it becomes is more affordable for buyers holding other currencies.
Investors are looking forward to the release of a slew of data this week, such as the International Energy Agency's report on Wednesday which includes figures on the state of OECD stocks. OPEC's May report, which includes production and export figures, will be released Tuesday.
The data will give traders a better picture of whether a global rebalancing is taking place in the oil market.
Last week saw volatile trading: Oil rose nearly 2% early on amid renewed diplomatic spats in the Middle East after Saudi Arabia, the United Arab Emirates and other Persian Gulf states severed diplomatic ties with Qatar, a member of OPEC.
Saudi Arabia and others have long accused Qatar of meddling in their internal affairs and backing terrorism, allegations that Qatar has denied.
Rising production activities outside of OPEC, particularly in the U.S., prompted UBS last week to cut its 2017 price forecast for WTI oil to $53 a barrel from $55.50. "U.S. shale players are clearly focused on delivering production growth, and plentiful capital is available to fund it," said Jon Rigby, the bank's head of oil research.
A net eight additional oil rigs were in operation in the U.S. last week, putting the figure at 741, the most since April 2015.
Gasoline futures fell 1.37 cents, or 0.91%, to $1.4880 a gallon. Diesel futures fell 0.58 cent, or 0.41%, to $1.4254 a gallon.
Summer Said contributed to this article.
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(END) Dow Jones Newswires
June 12, 2017 17:18 ET (21:18 GMT)