Oil prices rose on Monday, lifted by reports of renewed talks by some members of the Organization of the Petroleum Exporting Countries (OPEC) to restrain output.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $41.99 per barrel at 0643 GMT (2:43 a.m. ET), up 19 cents, or 0.5 percent, from their last close.
Brent futures LCOc1 were trading at $44.42 per barrel, up 15 cents, or 0.34 percent.
The price rise came on the back of renewed calls by some OPEC members to freeze production in a bid to rein in output that has been consistently outpacing demand, a demand that non-OPEC oil producing giant Russia was quick to dismiss.
“OPEC members including Venezuela, Ecuador and Kuwait are said to be behind this latest reincarnation. But just like previous endeavors, it seems doomed to fail,” said Matt Smith of ClipperData.
Yet in the absence of an agreement, the crude and refined product glut is still weighing on markets.
In China, July fuel exports rose over 50 percent from a year ago to a monthly record 4.57 million tonnes, official data showed on Monday, as easing demand growth and a surplus in refined oil products pushed refiners to increase shipments to overseas buyers.
Because of the fuel glut, money managers have positioned themselves in expectation of lower prices, raising the amount of short positions in WTI futures that would profit from lower prices to a new all-time record. 1067651MSHT
“In response to the negative market sentiment, parties such as hedge funds are once again taking speculative positions on further oil price declines,” Dutch bank ABN Amro said on Monday.
Meanwhile, the amount of oil rigs drilling in the United States rose to 381, the highest amount since March.
On the demand side, AB Bernstein said that strong recent oil demand growth was set to weaken.
“In July following the UK Brexit vote, the IMF downgraded global growth by 10 basis points in 2016 and 20 in 2017. This has negative implications for demand,” the analysts said, adding that oil demand growth would slow to around 1.1 percent in the second half of 2016 and to below 1 percent next year.
Such a slowdown would likely weigh on prices: “If record to near-record demand this summer for gasoline and crude oil failed to eat into the supply glut, then what happens to the glut once demand drops off this fall by around 1 million barrels per day?” asked the U.S.-based Schork Report in a note, adding it was bearish in its oil price outlook.