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Oil prices edge up as signs mount that market is bottoming out
[SINGAPORE] Crude futures edged up in early Asian trading on Monday after gaining over 15 per cent last week, and some indicators point to the possibility that the market is showing signs of bottoming out.
US West Texas Intermediate (WTI) crude futures were trading at US$32.88 per barrel at 0053 GMT, up 10 cents from their last settlement, and after gaining over 15 per cent the previous week.
International Brent futures were at US$35.15 a barrel, up 5 cents from their last close.
Analysts said that first signs of a strengthening market outlook were appearing after a 20-month rout that has seen prices fall by 70 per cent. "The Russian/Saudi production freeze talks continue to support the market, while in the US, shale producers continue to pull rigs from the ground in an effort to reduce spending. Baker Hughes data suggest US oil rig counts fell by 13 to 400," ANZ bank said on Monday.
Market data also suggests early signs of shifting sentiment.
The amount of open positions in WTI crude contracts that bet on a further fall in prices has fallen over 17 per cent since mid-February to their lowest level in 2016, although by historic levels their amount remains high.
At the same time, financial speculators have sharply raised their bullish bets on oil after talk of a global production freeze and signs of falling US shale crude output and growing gasoline demand.
Money managers raised their combined net long position in crude futures and options in New York and London by nearly 16 per cent for the week ended Feb 23, data by the US Commodity Futures Trading Commission (CFTC) showed. "The increase in speculative net longs in the CFTC report certainly reflects some traders' belief that oil has put in a near term bottom after the 20-month long selloff," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.