Oil futures registered further losses on Tuesday (21 March), as fears of rising US production led money managers to reduce bullish bets on both sides of the Atlantic.
At 4:41pm GMT, the Brent front month futures contract was down 1.01% or 51 cents to $51.11 per barrel, while the West Texas Intermediate (WTI) was 1.29% or 62 cents lower at $47.60 per barrel, as the market continues to give more weight to the downside drag of higher US crude production versus upside pull of Opec cuts.
According to data collated by Baker Hughes, the week ending 17 March marked a ninth successive rise in the number of operational oil and gas rigs stateside, with the US rig count up 313 rigs, year-over-year to 789 rigs, and US production up to 9.1m barrels per day (bpd); the highest since February 2016.
Meanwhile, data suggested speculators' net-long calls, i.e. bets to the upside, on ICE Brent futures, fell by 66,683 to 405,986, for the week ended14 March; the biggest decline since November.
A similar pattern was noted in Commodity Futures Trading Commission data on WTI futures stateside, which registered a decline of 23% in net-long bets to 288,774; the largest decline on record and the lowest level since December, more so as US stockpiles continue to rise.
Michael Wittner, Global Head of Oil Research at Société Générale's said, "US crude stocks have built every week this year (nine reporting weeks), building by 49.4m barrels or 784,000 bpd since 30 December. Despite continued strong Opec cuts and compliance in February, the markets have become impatient waiting to see any impact on US crude inventories."
However, Citigroup analysts said in a note to clients, that Opec's output reductions aimed at addressing the supply glut are "real" and already having an impact on market rebalancing.
Away from the oil market, precious metals registered modest upticks. At 4:50pm GMT, the Comex gold futures contract for April delivery was up 0.85% or $10.50 to $1,244.50 an ounce, while spot gold was trading at $1,244.38 an ounce, up 0.82% or $10.14.
FXTM research analyst Lukman Otunuga said vulnerable dollar supported gold intraday. "With the lingering impacts of last week's "dovish hike" still reverberating across the board, bulls may exploit this period of ongoing dollar weakness.
"While additional gains may be realised in the short term, the upside could be limited in the longer term when the dollar regains its attitude. From a technical standpoint, although prices are turning bullish on the daily charts, exhaustion below $1,240 could still encourage bears to send prices lower."
Elsewhere, Comex silver was up 0.70% or 12 cents to $17.56 an ounce, while spot was 0.09% or 84 cents to $971.44 an ounce.