Oil prices hit two-week high on equity market recovery, mideast tensions

Oil prices rise, but concerns over higher US production tempered Monday gains.  Apache photo.

Oil prices rise as border incidents in Syria bring Israel and Iran closer to direct confrontation

Oil prices rose slightly in light trading on Monday thanks to a recovery in the global equity market and Mid East tensions, but rising US production moderated gains.

By 2:03 p.m. EST, benchmark Brent had risen 75 cents to $65.59/barrel, after hitting an 11-day high of $65.75 earlier in the session.  US WTI rose 56 cents to $62.11/barrel, slightly down from an earlier session level that was its highest since Feb. 7.  The Canadian Crude Index was steady at $34.86.

Trading was quiet on Monday due to market holidays in the US and Greater China.

According to Reuters, European shares increased for a fourth straight session and global stocks are set for a sixth straight session of gains after a significant sell-off triggered by concerns over inflation and higher borrowing costs.

“Benign stock markets are providing … as are geopolitical tensions in the Middle East,” Commerzbank said in a note.

On Sunday, Israel’s Prime Minister Benjamin Netanyahu said Israel could act on its own against Iran, not just its allies in the Middle East. His comments came after border incidents in Syria brought Israel and Iran closer to direct confrontation.

Baker Hughes released its rig count on Friday showing the US oil rig count to be higher by seven rigs, now sitting at 798.  This is the first time since June that drillers have added rigs in four consecutive weeks.

This time last year, there were 597 oil rigs active in the US.  The increase shows energy companies have ratcheted up their spending since mid-2016 when crude prices began to recover from the 2014 crash.

The rig count is an indicator of future production.

Rising US production is undermining efforts by OPEC and some non-cartel nations to reduce the global supply of crude.  Last year, 24 OPEC and non-OPEC producers agreed to cut their overall production by 1.8 million barrels per day (b/d).

Data from InterContinental Exchange showed money managers have drastically reduced their bullish bets on oil futures by the most in nearly eight months to Feb. 13.  As well, speculators cut net long US crude futures and options positions last week by the most since late August, according the the US Commodity Futures Trading Commission.