Oil futures remained on a bullish course in European trading on (Monday) 30 August as chatter over a possible output freeze supported crude prices for yet another trading session.
At 2:58pm BST, the Brent front-month futures contract was up 0.57% or 28 cents to $49.54 per barrel, while the West Texas Intermediate was 0.81% or 38 cents higher at $47.36 per barrel as investors reduced short positions, i.e. bets that the oil price would fall.
According to the US Commodity Futures Trading Commission, speculators cut their short positions in West Texas Intermediate by 66,247 futures and options during the week ended 23 August; the most since 2006.
Members of the Organisation of Petroleum Exporting Countries (OPEC) are expected to hold an informal meeting in September with high expectations of a production freeze influencing trading patterns.
However, analysts at PVM Oil Associates said: "If the [September] meeting ends without something concrete, the oil price risks slipping rapidly back to the $40-level and then below."
Additionally, in a note to clients FXTM said that a potentially strengthening dollar, as US rate hike speculations intensify, could cap future speculative boosts in oil prices triggered by Opec.
"August's sharp oil-price rally which defied the fundamentals has already displayed signs of exhaustion, with the awful combination of oversupply fears and anxiety over demand waning ensures WTI remains depressed."
Meanwhile, global oil stockpiles continue to rise, note analysts at JBC Energy. "Available July data indicates a global build of almost 500,000 barrels per day (bpd), while weekly data from Japan and the US suggests another 40,000 bpd and 250,000 bpd respectively added to storage over the first three weeks of August."
However, the Vienna, Austria-based analysis firm's year-on-year demand growth assessment suggests a stagnation over June and July, which is expected to be followed by relatively minor growth of 100,000 bpd on average over the remainder of 2016. "While further stockpiling is a possibility, a significant reduction of the stocks overhang is rather unlikely," the concluded
Away from the oil markets, a stronger dollar also clobbered precious metals.
At 3:16pm BST, the Comex gold futures contract for December delivery was down 0.47% or $6.20 to $1,320.90 an ounce. Concurrently, Comex silver was 0.79% or 15 cents lower, while spot platinum fell 1.51% or $16.26 to $1,060.99 an ounce, as dollar continued to gain strength from the hawkish remark of the US Federal Reserve Chair Janet Yellen at the recent Jackson Hole Symposium stateside.