Oil stable as Asia stock markets rebound, but feelings cautious on trade concerns
SINGAPORE (Reuters) – Oil prices were stable on Monday, supported by a jump in Asian stocks, but analysts said that the feeling remains cautious after a fall in financial markets last week triggered concerns that global growth may slow.
Oil and gas containers are being seen at an oil store at a port in Zhuhai, China, 22 October 201[ads1]8. REUTERS / Aly Song
Future Month Brent Crude Oil Futures were $ 77.63 per barrel at 0221 GMT, 1 cent above their last close.
Graphic: U.S. rig number – TMSnr.rs/2OVjfgl
U.S. West Texas Intermediate (WTI) crude futures were $ 67.65 per barrel, up 6 cents from their last settlement.
Despite gains and quieter financial markets early on Monday, the mood among investors was gently cautious after major losses last week.
Oil is facing "downward pressure from lower global growth forecasts," said Alfonso Esparza, senior market analyst at futures broker Oanda.
Hedge funds slashed their bullish bets on US commodities in the last week to the lowest level of more than a year, the US Commodity Futures Trading Commission said on Friday.
The speculative group cut its combined futures and option position in New York and London with 42 644 contracts to 216 733 in the week to 23 October, the lowest level since September 2017.
There were also signs of a decline in global trade, With prices for dry bulk and container ships – which carry most raw materials and manufactured goods – comes under pressure.
On the supply side, however, oil markets remain tense in front of US-American sanctions against Iran's commodity exports, which will start next week and are expected to tighten the offer, especially to Asia that takes most of Iran's shipments.
The tight market in Asia is visible in the low amount of unsolced crude oil stored on tankers on water around Singapore and southern Malaysia, the region's main oil trade and storage hub.
Only four stationary super tanks are currently filled with crude oil, according to Refinitiv Eikon ship tracking data.
It's down from around 15 a year ago, and from 40 in mid 2016 below the top of the supply gluten.
In North America, however, there is no oil shortage, as US crude oil production has increased by almost a third since mid 2016 to about 11 million barrels a day.
Production will rise further. US drilling machines add two oil rigs this week to October 26, bringing a total of 875, the highest level since March 2015, Baker Hughes Energy Services said Friday.
More than half of all American oil giants are in the Permian basin in western Texas and eastern New Mexico, the country's largest slate oil formation.
Reporting by Henning Gloystein; Editing Richard Pullin
