Published: Tue, March 21, 2017
Economy | By Melissa Porter

WTI, Brent crude oil futures settle higher

OPEC members are cutting production in an effort to drive up oil prices, but a robust US output has prevented any significant rally.

Money managers cut bets on rising West Texas Intermediate crude by a record amount during the week ended March 14, while wagers on a further price drop doubled as oil remained below $50 a barrel.

The value of long positions for Brent and West Texas Intermediate crude, the global and USA benchmarks, reached a combined US$56 billion on February 23, the highest since the Organization of Petroleum Exporting Countries announced the output cuts in late November.

"With the Baker Hughes rig count rising for a ninth straight week, investors will be hoping that Opec this week will reiterate commitment to production cuts, perhaps going so far as to begin talking up chances of further cuts in June".

Riyadh led OPEC and other producers in December to reach their first deal since 2001 to curtail oil output and prop up weak oil prices which had strained many producers' budgets. "A major threat to the market, whether a BAT or simple tariffs are enforced, could arise from diminished oil and product demand as protectionist policies are sure to weigh on economic growth".

Producers and merchants increased their short positions, or bets on lower prices, to 739,736 futures and options during the report week, the highest level in a month. Producers added more oil rigs to USA fields, extending a drilling surge into a 10th month, Baker Hughes Inc. said on Friday.

USA oil output has risen to over 9.1 million bpd from below 8.5 million bpd in June a year ago.

USA drillers added 14 oil rigs in the week to March 17, 2017 totalling to 631 rigs.

Crude oil is likely to continue to drift lower over the near-term if supply continues to increase.

The Opec and some non-Opec producers cut production from January 1 to reduce record stocks of crude.

Meanwhile, the deal between Opec and non-Opec producers, which was agreed late a year ago and aimed to curb production, appears to be having little effect on the glut at the moment, with three of the last four weeks showing substantial inventory increases.

In other related vegetable oils, soybean oil on the Chicago Board of Trade climbed as much as 0.9 percent, while the September soybean oil contract on the Dalian Commodity Exchange rose up to 0.8 percent.

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