Oil futures were active in the Asian trades early Tuesday, but still roam around its lower levels in 4 months, with the oversupply and high US inventories continuing to be an issue. The WTI futures for April delivery rose 18 cent or 0.37% to $48.84 per barrel, while Brent futures rose 25 cent or 0.48% to $51.78 per barrel.
Oil prices dropped more than 10% since the start of this year, affected by the increase in shale productions and the US crude inventories, which almost erased all the gains made since the OPEC production cut agreement to cut 1.8 million barrel daily in the first half of 2017.
The oversupply potential drove the investors away from oil. Until 14th of March, the speculation short deals on WTI futures, by the fund managers, almost doubled to 128,947 contract, based on the Commodity Futures Trading Commission’s data in US, and turning from long positions to short positions shows that the fund managers are losing faith in OPEC deal.
The main reasons behind the bearish sentiment is the active US shale oil production after being calm for 2 years. The recent data shows the US production above 9 million barrel in the last 4 weeks, while the crude inventories increased to 528.2 million barrel. This means that the US raised its production by 412000 barrel a day since the OPEC and Russian production cut agreement, and the S&P Global Plates said that they expect the US crude inventories to raise by 2 million barrels in the week until 17th March. If the official Energy Information Administration data published on Wednesday shows an increase, then it will be the 10 consecutive raise.
Increasing production in other areas also affects the price. News says that the Libyan National Oil Company mentioned that loading in the two main petrol ports will resume after the latest conflicts with local rebels. Stewart Eev, the Customer Relations Manager at A.M Financials, said that the strong oil production from the US and Africa could encourage OPEC to extend their agreement beyond the first 6 months.