Oil held losses in a bear market as a rebound in US drilling added to signs producers will keep pumping amid a global glut.
Futures were little changed in New York after capping a 5.4 per cent decline last week. The number of rigs seeking oil rose by 21 to 659, the third weekly increase this month, according to Baker Hughes. Speculators cut their net-long positions in West Texas Intermediate crude to the lowest level in more than two years, Commodity Futures Trading Commission data show.
Oil’s rebound from a six-year low has faltered amid signs a surplus will persist as the US pumps near the fastest rate in three decades and leading members of Opec produce at record levels. The Bloomberg Commodity Index fell last week by the most since September 2011, extending a drop to a 13-year low.
“The overall weakness in markets is based on concerns about demand and a stronger US dollar, which tends to impact the commodity space generally, and it’s not helping oil,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “Oil is one of the most affected because of oversupply.”
WTI for September delivery was at $48 a barrel in electronic trading on the New York Mercantile Exchange, down 14 cents, at 12.56pm Sydney time. The contract fell 31 cents to $48.14 on Friday, the lowest level since March 31. The volume of all futures traded was 42 per cent below the 100-day average. Prices have slumped more than 20 per cent since the peak reached in June, meeting the common definition of a bear market.
Brent for September settlement was 8 cents higher at $54.54 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 4.3 per cent last week. The European benchmark crude was at a premium of $6.55 to WTI.
US drillers added the most oil rigs to fields last week since April 2014, according to Baker Hughes data. While the number of active machines have climbed this month, the total count is still down about 60 per cent since December.
Net-long positions in WTI fell by 28 per cent to 106,383 futures and options in the seven days ended July 21, the least since December 2012, according to the CFTC. US crude supplies remain almost 100 million barrels above the five-year average, according to the Energy Information Administration.
The Bloomberg Commodity Index of 22 raw materials extended its decline Monday for a fourth day amid concern that slower economic growth in China and a stronger dollar will crimp demand. The Bloomberg Dollar Spot Index, a gauge of the greenback versus 10 major peers, lost 0.2 per cent after adding 0.1 per cent through July 24 in its fifth weekly advance.
Follow The National’s Business section on Twitter