Oil futures finished higher on Tuesday, with the U.S. benchmark rebounding after a drop to a more than one-week low a day earlier, as investors awaited weekly petroleum data, which may reveal a fourth straight weekly rise in domestic crude inventories and declines in product supplies.
“As we enter the driving season, speculative funds are continuing to build their long position” in the oil market, said Scott Gecas, chief market strategist at Walsh Trading.
The U.S. benchmark, West Texas Intermediate crude for May delivery CLK9, +1.50% rose 65 cents, or 1%, to settle at $64.05 a barrel on the New York Mercantile Exchange. It also fell Monday to finish at $63.40, the lowest for a most-active contract since April 5, according to Dow Jones Market Data. June Brent crude LCOM9, +1.04% the global benchmark, added 54 cents, or 0.8% to $71.72 a barrel on ICE Futures Europe.
Supportive factors for oil include reduced output from Russia, sanctions on Iranian oil, and rising U.S. oil refinery operating rates, but with a large net long position in the market, oil is “vulnerable to long liquidation on headline risk,” Gecas said.
“The fact remains what will drive price will be headlines,” he said. But he expects “the start of liquidation to happen with a break of $63.30” in WTI.
Oil pulled back Monday after Russia’s finance minister reportedly questioned his country’s participation in a production-cut deal led by the Organization of the Petroleum Exporting Countries that’s been credited in part for a rally that’s seen the U.S. benchmark surge nearly 40% since the end of last year as Brent rose more than 30%. The deal is set to expire at the end of June and OPEC and its allies have scheduled their next official meeting for June 25-26.
Renewed fighting in Libya has