Oil gains as sell-off seen as excessive

hong kong/london — Oil rose, trimming its biggest monthly decline in almost a year, on speculation that its recent sell-off may have been excessive.

Prices rose as much as 1.5 per cent in New York on Monday. Still, summer demand for driving fuels should whittle away excessive inventories, according to Swedish bank SEB AB. Crude’s 14-day relative strength index dipped below 30 last week, a sign that prices had collapsed very quickly.

Oil tumbled into a bear market last week on concerns that expanding global supply will counter the impact of output cuts from the Organisation of Petroleum Exporting Countries and its partners including Russia. US crude drillers added rigs for a 23rd straight week, the longest stretch in three decades, according to data Friday from Baker Hughes.

“There is currently no headline bullish driver pushing it higher,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. Prices are instead “rebounding on expectations for a tightening third quarter” while “technical indicators pointed to oversold territory.”

WTI for August delivery climbed 64 cents to $43.65 a barrel on the New York Mercantile Exchange, and was at $43.48 at 10.12am in London.

Brent for August settlement gained 1.5 per cent, to $46.24 a barrel on the ICE Futures Europe exchange.