Oil up in skittish trade; stocks, refinery strike limit gains

Reuters

Published Feb 02, 2015 01:24PM ET

Oil up in skittish trade; stocks, refinery strike limit gains

By Barani Krishnan

NEW YORK (Reuters) - Oil prices rose in volatile trading on Monday, with some investors betting a powerful rally from Friday had put a bottom to the seven-month long rout on the market even as others remained pessimistic.

Benchmark Brent and U.S. oil futures swung in a band of about $4 a barrel, one of their widest in weeks, as near-term technical signals indicated further gains while fundamental data continued to weigh on the market.

The spread between the two oils widened to above $5 a barrel, its biggest since November.

Traders said oil services company Genscape estimated a stock build of 2.3 million barrels in the Cushing, Oklahoma, delivery point for U.S. crude last week, adding to already record-high inventories in the country.

A U.S. refinery strike, which theoretically meant higher crude supplies in the market, and disappointing U.S. consumer spending and manufacturing data also knocked oil prices off their early highs.

"People are very, very skittish," said analyst Chandravir Ahuja of Kolmar Americas Inc in Bridgeport, Connecticut.

"I don't think anything's changed fundamentally, except for the psychology of the market," Ahuja said, "and we're moving a lot more on headlines that we probably would on a normal day."

Benchmark Brent crude was up $1.45 at $54.44 a barrel by 12:20 p.m. EST (1720 GMT), swinging between a session high of $55.62 and low $51.41.

U.S. crude was up $1.12 at $49.36 a barrel, moving between $50.56 and $46.67.

"I think people were trying to play off again on Friday's rally on the assumption that the market's found a bottom, but I don't think that's the case yet," said Tariq Zahir, managing member of Tyche Capital Advisors in Laurel Hollow, New York.

Prices jumped 8 percent on Friday, the biggest daily gain since 2009 for Brent, after data showed U.S. oil drilling rigs had fallen their most in a week in nearly 30 years. Month-end covering by traders taking profits on earlier short positions added fuel to the rally.

Speculators in Brent had raised their net long positions by 1,056 contracts to 143,039 in the week to Jan. 27, exchange data showed on Monday, as some took the view that prices were stabilizing from the selloff that began in the summer. [O/ICE]

Technical indicators also showed Brent might be on the way up.