Oil-focused funds lose big on falling crude prices

Oil-focused funds lose big on falling crude prices

Crude-oil prices advanced Tuesday, putting the commodity on track for its fourth gain in a row, as traders braced for a possible decline in US supplies.

West Texas Intermediate for August delivery settled at $43.01 a barrel, up 27 cents, on the New York Mercantile Exchange.

Oil in NY and London tumbled into a bear market last week on concerns that expanding global supply will counter the impact of output cuts from the Organisation of Petroleum Exporting Countries and its partners including Russian Federation.

OEPC and its 11 partners agreed in May to extend the cuts of 1.8 million barrels per day (bpd) until March next year. However, the latest oil market report from OPEC showed that production increased by 336,000 barrels in May, thanks largely to two exempted countries, Libya and Nigeria. While U.S. stockpiles have fallen by 26 MMbbl since March, they remain 100 million above the five-year average and drillers have added rigs for the longest stretch in at least three decades.

A fuel glut in China, a hangover from demonetisation in India, and an ageing, declining population in Japan are holding back crude oil demand growth in three of the world's top four oil buyers.

Oil edged up for a third straight session on Monday, climbing off last week's seven-month lows but with gains capped by the relentless rise in USA supply and bloated global inventories. "It will depend on the weekly USA inventory data". "It has moved a long way in response to that news, maybe we are getting to a point that there is upside risk to any good news". Speculators cut their net-long position in U.S. benchmark futures to the lowest in 10 months last week, and in North Sea Brent to the lowest since January 2016, exchange data showed. Shale producers in the U.S. Permian basin will be able to make money even if the price falls to the mid-$20s, according to Scott Sheffield, chairman of Pioneer Natural Resources Co.

OPEC delegates said the cartel will not rush into making a further cut in output or end some countries' exemptions from output limits, although a meeting in Russian Federation next month is likely to consider further steps. We do not have to look too far for likely culprits on the supply side.

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