Investing.com - Crude oil futures held on to overnight gains during U.S. morning trade on Monday, as last week’s drop to the lowest levels since November created bargain buying opportunities for investors, though ongoing concerns over the euro zone’s debt crisis capped gains.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD91.94 a barrel during U.S. morning trade, gaining 0.8%.
The June contract is due to expire at the end of Tuesday’s trading session. Contract expiration often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.
Meanwhile, the more actively traded contract for July delivery advanced 0.55% to trade at USD92.30 a barrel. It earlier fell by as much as 0.65% to trade at USD91.14 a barrel, the lowest since November 1, 2011.
Oil futures were rattled last week, falling to the lowest level since November of last year, as speculation over the possibility of a Greek exit from the euro zone intensified after talks aimed at forming a coalition government failed.
NYMEX-traded oil prices have fallen nearly 13% in the past three weeks, the largest three-week loss since the week to August 14, 2011, when prices dropped 14.5%.
But prices recovered from the steep decline as investors returned to the market to seek cheap valuations.
Wall Street investment bank Goldman Sachs said in a report earlier that the extent of the recent sell-off was unwarranted as the balance between supply and demand is tightening.
Comments made over the weekend from Chinese Premier Wen Jiabo provided further support to prices. Wen said China will focus more on bolstering economic growth, raising hopes for further fiscal and monetary easing measures from Beijing.
His comments were followed by a report in the state-run China Securities Journal, saying that China may announce stimulus actions in the near future.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand. Fears over a slowdown in oil demand from the Asian nation have been weighing on energy prices lately.
Meanwhile, markets remained jittery after the leaders of the Group of Eight major economies failed to reach an agreement on how to calm market turmoil stemming from the crisis in the euro zone. However, in a statement leaders indicated that they do want Greece to remain in the euro area and pledged to take measures to bolster their economies.
G8 leaders also raised the pressure on Iran, signaling their readiness to tap into emergency oil stockpiles this summer if tougher new sanctions on Tehran threaten to strain supplies.
The statement came days ahead of nuclear talks between world powers and Iran in Baghdad scheduled for May 23.
Despite the day’s gain, oil traders see further downside to prices, with technical traders expecting the next level of support for oil to be at USD89.93 a barrel.
Money managers in oil futures and options cut their net long positions to the lowest level since September 2010, as traders trimmed more of their bets oil prices will go higher.
NYMEX crude prices are off almost 14% in May and have fallen nearly 17.5% since hitting a March 1 intraday peak of USD110.53 a barrel, as concerns lingered over a widening global economic slowdown and as tensions have eased between Iran and Western nations over the country’s nuclear program.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery was up 0.85% to trade at 108.08 a barrel, with the spread between the Brent and crude contracts standing at USD15.78.
The spread between the two contracts was expected to narrow in the coming weeks, after pipeline operators Enbridge and Enterprise Products Partners reversed flows on the Seaway pipeline over the weekend, pumping crude south from Cushing, Oklahoma, to the Gulf Coast, in what could ease a U.S. supply glut.
Brent crude, the European benchmark, is more than 16% off its intraday high of USD128.38 hit on March 1.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But revived talks between Iran and major powers over Tehran's nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower U.S. economic and employment growth, helped pull oil prices back from first-quarter highs.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD91.94 a barrel during U.S. morning trade, gaining 0.8%.
The June contract is due to expire at the end of Tuesday’s trading session. Contract expiration often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.
Meanwhile, the more actively traded contract for July delivery advanced 0.55% to trade at USD92.30 a barrel. It earlier fell by as much as 0.65% to trade at USD91.14 a barrel, the lowest since November 1, 2011.
Oil futures were rattled last week, falling to the lowest level since November of last year, as speculation over the possibility of a Greek exit from the euro zone intensified after talks aimed at forming a coalition government failed.
NYMEX-traded oil prices have fallen nearly 13% in the past three weeks, the largest three-week loss since the week to August 14, 2011, when prices dropped 14.5%.
But prices recovered from the steep decline as investors returned to the market to seek cheap valuations.
Wall Street investment bank Goldman Sachs said in a report earlier that the extent of the recent sell-off was unwarranted as the balance between supply and demand is tightening.
Comments made over the weekend from Chinese Premier Wen Jiabo provided further support to prices. Wen said China will focus more on bolstering economic growth, raising hopes for further fiscal and monetary easing measures from Beijing.
His comments were followed by a report in the state-run China Securities Journal, saying that China may announce stimulus actions in the near future.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand. Fears over a slowdown in oil demand from the Asian nation have been weighing on energy prices lately.
Meanwhile, markets remained jittery after the leaders of the Group of Eight major economies failed to reach an agreement on how to calm market turmoil stemming from the crisis in the euro zone. However, in a statement leaders indicated that they do want Greece to remain in the euro area and pledged to take measures to bolster their economies.
G8 leaders also raised the pressure on Iran, signaling their readiness to tap into emergency oil stockpiles this summer if tougher new sanctions on Tehran threaten to strain supplies.
The statement came days ahead of nuclear talks between world powers and Iran in Baghdad scheduled for May 23.
Despite the day’s gain, oil traders see further downside to prices, with technical traders expecting the next level of support for oil to be at USD89.93 a barrel.
Money managers in oil futures and options cut their net long positions to the lowest level since September 2010, as traders trimmed more of their bets oil prices will go higher.
NYMEX crude prices are off almost 14% in May and have fallen nearly 17.5% since hitting a March 1 intraday peak of USD110.53 a barrel, as concerns lingered over a widening global economic slowdown and as tensions have eased between Iran and Western nations over the country’s nuclear program.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery was up 0.85% to trade at 108.08 a barrel, with the spread between the Brent and crude contracts standing at USD15.78.
The spread between the two contracts was expected to narrow in the coming weeks, after pipeline operators Enbridge and Enterprise Products Partners reversed flows on the Seaway pipeline over the weekend, pumping crude south from Cushing, Oklahoma, to the Gulf Coast, in what could ease a U.S. supply glut.
Brent crude, the European benchmark, is more than 16% off its intraday high of USD128.38 hit on March 1.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But revived talks between Iran and major powers over Tehran's nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower U.S. economic and employment growth, helped pull oil prices back from first-quarter highs.