Oil Prices Rise 2%, Hit One-Week High

An oil rig drilling a well at sunrise owned by Parsley Energy Inc. near Midland Texas U.S

Oil prices rose for a fourth consecutive session on Tuesday boosted by a weaker dollar and investors covering short positions, but worries over persistent oversupply capped gains.

USA benchmark West Texas Intermediate was slightly up Monday, trading at $43.14 a barrel.

Imports of Saudi barrels into the U.S.so far this month have dropped below one million barrels per day for the first time since last November. "The resilience of US shale oil producers to actually step up production once prices came above $50 is a surprise".

Oil in NY and London tumbled into a bear market last week on concerns that expanding global supply will counter output cuts from the Organization of Petroleum Exporting Countries and its partners including Russian Federation.

Opec states and 11 other exporters agreed in May to extend cuts of 1.8-million barrels per day (bpd) until March, in the hope that it would force global supply and demand to align.

Despite the cuts, which started in January, markets remain well supplied due to rising output elsewhere.

Oil fell for a fifth week after slipping into a bear market on concern that rising production from the U.S.to Libya will offset cuts from OPEC and its allies. OPEC member Iran was also allowed a small increase to recover market share lost under Western sanctions over its nuclear programme. The number of USA oil rigs in operation has hit its highest in over three years.

Analysts and traders told CNBC oil's plunge to the low $40 range has made traders less likely to take out new short positions, or bets that prices will fall further.

Analysts at Bank of America-Merrill Lynch said demand had not grown quickly enough to mop up any excess output. Shale drillers added oil rigs for a record 23rd straight week as a growing backlog of unfinished wells - and the crude that will eventually flow from those projects - threatens to add to the global glut. A separate report showed that US oil producers are pumping at 9.35 million barrels per day, which is the highest level of production since August 2015.

The commodity has fallen almost 20 percent year to date, the biggest first-half slide in 20 years, according to Reuters.

Almost six months through the OPEC / NOPEC production cut, and it is very much still a case of whack-a-mole for the various players: one month they duck lower, only to poke their head higher the next month.

Hopeful from a rise in oil prices after initial compliance numbers, fund managers boasted a net long position of 1 billion barrels at the end of February. We think we'll probably catch a bid a few weeks out from there.

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