SINGAPORE (Reuters) – Oil prices were stable on Monday, supported by a bounce in Asian stocks, but analysts said sentiment remained cautious after a plunge in financial markets last week triggered worries that global growth may be slowing.
Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China October 22, 2018. REUTERS/Aly Song
Front-month Brent crude oil futures were at $77.63 a barrel at 0221 GMT, 1 cent above their last close.
Graphic: U.S. rig count – tmsnrt.rs/2OVjfgl
U.S. West Texas Intermediate (WTI) crude futures were at $67.65 a barrel, up 6 cents from their last settlement.
Despite the gains and calmer financial markets early on Monday, sentiment among investors remained cautious after hefty losses last week.
Oil faced “downward pressure from lower growth forecasts around the globe”, said Alfonso Esparza, senior market analyst at futures brokerage Oanda.
Hedge funds slashed their bullish wagers on U.S. crude in the latest week to the lowest level in more than a year, the U.S. Commodity Futures Trading Commission said on Friday.
The speculator group cut its combined futures and options position in New York and London by 42,644 contracts to 216,733 in the week to Oct. 23, the lowest level since September 2017.
There were also signs of a slowdown in global trade, with rates for dry-bulk and container ships – which carry most raw materials and manufactured goods – coming under pressure.
On the supply side, however, oil markets remain tense ahead of looming U.S. sanctions against Iran’s crude exports, which are set to start next week and are expected to tighten supply, especially to Asia which takes most of Iran’s shipments.
The tight market in Asia is visible in the low amount of unsold crude oil stored on tankers on waters around Singapore and southern Malaysia, the region’s main oil trading and storage hub.
Just four stationary supertankers are currently filled with crude oil, according to Refinitiv Eikon ship tracking data.
That’s down from around 15 a year ago, and from 40 in mid-2016 during the peak of the supply glut.
In North America, however, there is no oil shortage as U.S. crude oil production has increased by almost a third since mid-2016 to around 11 million barrels per day.
Production is set to rise further. U.S. drillers added two oil rigs in the week to Oct. 26, bringing the total count to 875, the highest level since March 2015, Baker Hughes energy services firm said on Friday.
More than half of all U.S. oil rigs are in the Permian basin in West Texas and eastern New Mexico, the country’s biggest shale oil formation.
Reporting by Henning Gloystein; Editing by Richard Pullin