By Amrith Ramkumar
A recent rebound in U.S. crude-oil prices back above the closely watched psychological level of $60 is increasing focus on gauges of market momentum, the latest swing in a topsy-turvy 2019 for energy markets.
West Texas Intermediate futures, the U.S. price gauge, closed above $60 for the first time in seven weeks Wednesday and edged up less than 0.1% to $60.44 on the New York Mercantile Exchange Thursday. Another gain Thursday would be crude's 12th advance in 15 sessions, a powerful rebound after prices tumbled into a bear market of more than 20% below their April peaks in early June.
Oil is still nearly 9% off its April highs even with its recent surge.
But some analysts think prices staying above $60 and other closely monitored levels could add fuel to the rally. With their recent rally, they have climbed back above their 50- and 200-day moving averages, trend lines observers of market momentum use to trace an asset's recent performance. Eclipsing such lines is typically viewed as a bullish development.
Additionally, oil has stayed between $50 and $60 for much of the last three years, so moves out of that range tend to generate more interest in crude. After the ratio of bullish bets to bearish bets on oil futures by hedge funds and other speculative investors slid through mid-June, it has climbed in three consecutive weeks through July 2 with prices rebounding, Commodity Futures Trading Commission data show. Figures for the week ended Tuesday will be released Friday.
Despite fears of softening demand amid trade tensions and excess supply, U.S. crude stockpiles have started to come down and the Organization of the Petroleum Exporting Countries and its allies continue to curb output.
A storm brewing near the Gulf of Mexico, a key production region, has resulted in some supply disruptions this week, and many analysts remain wary that an escalation in tensions between the U.S. and Iran could further disrupt the flow of oil around the globe.
"The rally will likely remain nervous and prone to short-term setbacks, but we think it has further to go," Standard Chartered analysts said in a note to clients.
Brent crude, the global oil-price gauge, edged down 0.2% to $66.89 a barrel on London's Intercontinental Exchange Thursday.
In one encouraging sign for oil bulls, OPEC cut its 2019 oil-production growth forecast for its non-cartel peers in its monthly market report Thursday. The cartel also left its demand-growth target unchanged in June, following downgrades to demand estimates in recent months that sent prices tumbling.
Elsewhere in commodities Thursday, natural-gas futures edged up 0.7% to $2.641 a million British thermal units, also continuing a recent rebound even though weekly stockpile figures showed inventories rose more than expected during the week ended July 5.
Most-active Comex gold futures added 0.2% to $1,415.10 a troy ounce, hovering near a roughly six-year high as analysts continue to project a swift drop in interest rates that could make gold, which offers no yield, more attractive to yield-seeking investors.
Copper inched down 0.4% to $2.6830 a pound Thursday.
Write to Amrith Ramkumar at firstname.lastname@example.org