Oil Price Toys With $62 Amid Iranian Friction, US Drilling Pullback

Oil Toys With $62 Amid Iranian Friction, US Drilling Pullback

"Speculative financial investors are betting on further price rises", with net long positions in Brent rising to a record-high 560,890 contracts last week, analysts at Commerzbank wrote in a note Monday.

"Oil prices are finely balanced in today's trading session".

"It makes for knee-jerk reactions in the oil market, upswings and corrections, as well as a more pronounced herd behavior in trade", Hari noted. In all but 10 states the average rose by just two cents a gallon.

Oil had its strongest opening week for any year since 2013 last week as U.S. stockpiles continued to shrink and amid output curbs by the the Organisation of Petroleum Exporting Countries (Opec) and its allies.

Oil prices rallied in the first week of 2018, supported by increased geopolitical risk and severely cold weather in the eastern US, but the "perfect storm" that pushed oil prices higher also raises the risk of a correction and of heightened herd mentality in trade, analysts reckon.

In the US, drillers reduced the oil rig count last week by 5 to 742 rigs. "How the market handles this may set the tone for the near term trend".

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Brent futures gained 16 cents, or 0.2 percent, to settle at $67.78 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 29 cents, or 0.5 percent, to settle at $61.73.

States where prices moved most last week were: IN and MI (down seven cents); OH (down five cents); Minnesota and CT (up four cents); Alabama, California and Idaho (up three cents); and IL and Kentucky (down three cents). Front-month prices rose about 1.1 percent last week. The price differential (spread) between WTI and Brent crude narrowed by almost a dime to $6.10 a barrel week over week.

United States explorers spent the final six weeks of 2017 in a virtual standstill, adding just as many rigs as they laid off. Bowing to heightened investor pressure, drillers are seeking to do more with less in a bid to boost profits. Longs fell by 3.8%, and shorts fell 4.3%.

The Latin American country's crude production fell 100,000 barrels a day last month to 1.7 million barrels a day, a level it hit back in late 2002, when thousands of oil industry workers went on strike for three months, according to Platts' monthly survey.

An Iranian oil tanker sailing to South Korea collided with a cargo ship off China's coast and caught fire, leaving at least 32 people missing on Sunday.

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