Crude futures reverse territory late in session, amid Greek developments

WTI moved back above $60 on Monday, while brent stayed above $63

Crude futures inched up on Monday paring earlier losses late in the session, amid increased optimism in Greek Debt negotiations and speculative trading in the energy markets from hedge funds.

On the New York Mercantile Exchange, WTI crude for August delivery gained 0.41 or 0.60% to 60.37 a barrel. Texas Long Sweet futures traded in a tight range on Monday from 59.28 and 60.63. On Friday, WTI crude closed below $60 for the first time in eight sessions.

On the Intercontinental Exchange (ICE), brent crude for August delivery rose 0.34 or 0.55% to 63.36 a barrel. Brent futures wavered on Monday between 62.11 and 63.74. The spread between the international and U.S. domestic benchmarks of crude fell to 2.99, below Friday’s level of $3.09.

Hedge fund and other money market fund investors trimmed WTI short wagers 4.3% for the five-day period that ended on June 16, while reducing long wagers by 0.2%, resulting in a 0.8% gain in net long positions, according to data compiled by the U.S. Commodities Futures Trading Commission. The spread between December and August WTI futures stood at 1.48, as July futures expired on Monday.

Energy traders remain focused on a glut of oversupply in global markets, following market-moving comments from Saudi Arabia oil minister Ali Al-Naimi last week. Weeks after Opec elected to maintain its production ceiling at its current level above 30 million barrels, Al-Naimi said his country has roughly 2 million barrels of daily reserves and is ready to increase production if demand spikes.

At the same time, the U.S. Energy Information Administration (EIA) projects U.S. output to average 9.4 million barrels per day in 2015, before declining to 9.3 million bpd. In May, Opec pumped its highest level of crude since October, 2012, in an effort to depress prices and dominate market share.

On Friday, oil services firm Baker Hughes (NYSE:BHI) said the U.S. oil rig count for the week of June 12 fell by four to 631, marking the 28th consecutive week of weekly declines. U.S. oil rigs are now at their lowest level since August, 2010.

Elsewhere, EUR/USD fell mildly 0.09% to 1.1343 as the dollar gained more than 0.20%, amid positive developments in longstanding Greek Debt negotiations. Leaders are optimistic that a deal between Greece and its international creditors could be reached later this week after the cash-strapped nation reportedly made concessions on early retirement and Value Added Taxes on electricity. A deal could unlock critical aid on the final €7.2 billion tranche of a €240 billion bailout deemed necessary for Greece to stave off bankruptcy.

Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.


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