(Corrects to remove reference to oil prices breaking a two-day
losing streak in paragraph 1; corrects paragraph 3 to show
prices gained, not bounced)
* Financial traders pour cash into long positions
* Physical oil markets remain bloated
* U.S. drilling rises for record 21 weeks
By Amanda Cooper
LONDON, June 12 Oil rose on Monday after futures
traders increased their bets on a renewed price upswing even
though rising U.S. drilling helped keep physical markets
Brent crude futures were up by 63 cents at $48.78 a
barrel by 1405 GMT, having hit a session high of $49.15. U.S.
West Texas Intermediate (WTI) crude futures rose 61 cents
to $46.44, having peaked at $46.69.
Traders and analysts said the gains looked technical in
nature, after WTI rallied and encouraged a similar move in the
Brent market. But they said the move might prove fleeting.
"When you start to approach $45 a barrel in WTI, you're in
an area where you do find some price support and I think there
has been some evidence last week of investment flows coming back
into crude oil," Petromatrix strategist Olivier Jakob said.
"You have to be careful not to be too optimistic for now,"
he said. "Physical differentials are still under pressure and
the time structure is still under pressure in Brent. It's a bit
premature to call for much higher oil prices."
Traders said the price rises came as data showed speculative
traders had increased their investment in crude futures by
taking on large volumes of long positions.
"Oil bulls have reset for a technical bounce," said Stephen
Schork, author of the Schork Report.
While financial traders have confidence in rising prices,
the physical market remains under pressure, especially due to a
rise in U.S. drilling.
U.S. drillers added eight oil rigs in the week to June 9
RIG-OL-USA-BHI, bringing the total count to 741, the most
since April 2015, energy services firm Baker Hughes Inc
said on Friday.
U.S. output has risen by more than 10 percent since
mid-2016, undermining OPEC-led pledges to cut almost 1.8 million
bpd of production until the first quarter of 2018.
The oil price slid to one-month lows last week as evidence
of rising output in Libya and Nigeria, two OPEC members excluded
from the cuts, added to investor concerns about excess supply.
"With the typically tighter second half of the year fast
approaching, rumours of oil prices having found their bottom are
doing the rounds," PVM Oil Associates analyst Stephen Brennock
said in a note.
"Yet such claims are premature as lingering doubts that
prolonged OPEC curbs will drain the oil glut along with the
simultaneous uptick in U.S., Libyan and Nigerian output make for
a bearish cocktail," he wrote.
(Additional reporting by Henning Gloystein in Singapore;
Editing by Dale Hudson and David Goodman)