Oil rose more than 2 percent on Monday, resuming its longest stretch of daily gains in more than five years after data pointed to diminished U.S. output, though analysts said news of rising OPEC production could cap gains.
Brent crude futures closed up 91 cents, or 1.9 percent, to $49.68 a barrel. The price rose 5.2 percent last week for the first weekly gain in six.
U.S. crude futures closed up $1.03, or 2.2 percent, to $47.07 a barrel, an almost one-month high. U.S. crude futures trading volumes were low a day before the U.S. Independence Day holiday.
Crude was up for an eighth straight session, the longest stretch of gains since February 2012.
“It’s all about market sentiment,” said Commerzbank senior oil analyst Carsten Fritsch. He cited a 100,000 barrel per day drop in U.S. production due to tropical storms and maintenance, as well as a decline in U.S. rig count.
“These… (temporary) factors outweigh the sharp increase in OPEC oil production in June… and the continued increase in Libyan and Nigerian output, at least at the moment,” he said.
Speculators in Brent crude futures and options raised their bets against a sustained price rise to the highest level on record in the latest week. In a note on Friday, Citibank wrote that the managed net long position was the smallest since January 2016.
After 23 straight weeks of increased rigs, drilling activity for new oil production in the United States fell for the first time since January, dropping by two rigs, while U.S. government data showed crude output fell in April for the first time this year.
“We think the fall in prices has caused U.S. output growth to slow,” Standard Chartered wrote in a note on Monday, “Revisions for May and June will confirm that supply is growing at a significantly more modest rate than the market has believed up to now.”
The oil price is down more than 12 percent this year, with strong global demand insufficient to absorb rising output from the United States, Nigeria, Brazil, the North Sea and Libya, which has risen to more than 1 million barrels per day.
Output from the Organization of the Petroleum Exporting Countries hit a 2017 high. June OPEC production rose 280,000 bpd to 32.72 million bpd, a Reuters survey showed, despite the group’s pledge to hold back output.
On Monday at an event in London, Iraq’s oil minister, Jabar al-Luaibi, said the country has the right to achieve oil output in line with its crude reserves.