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Oil gains as biggest monthly loss in a year considered excessive

Hong Kong - 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% 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 as much as 64 cents to $43.65 a barrel on the New York Mercantile Exchange, and was at $43.48 at 11:12. Total volume traded was about 19% above the 100-day average. Prices are down about 10% this month.

Brent for August settlement gained as much as 70c to $46.24 a barrel on the London-based ICE Futures Europe exchange. Front-month prices lost 3.9% ast week. The global benchmark crude traded at a premium of $2.54 to WTI.

Commodity Futures Trading Commission data on Friday showed money managers cut their net-bullish positions on WTI to the lowest in 10 months during the week ended June 20 and boosted wagers on falling prices. 

“There is scope for oil markets to tighten over the rest of the year,” Kerry Craig, global markets strategist for JPMorgan Asset Management, said in a Bloomberg television interview. “As those prices stay weak, certainly some of those companies start adjusting their outlook for capex and investment and that slowly actually does start to bring rebalance into the market.”

Oil-market news:

Enterprise Products Partners resumed service on its Seaway Legacy crude pipeline Sunday after repairs to a leak discovered on Thursday were completed, according to person familiar with matter. Enquest Plc has started pumping oil from the Kraken field in the UK North Sea.

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