June 12 (UPI) -- Crude oil markets looked to future support with bargain hunters looking to wade back in Monday after last week's loss of the $50 per barrel floor.
Crude oil prices lost significant ground last week after the U.S. Energy Information Administration showed a surprise build in oil inventories in the world's leading economy, erasing a streak that offered some signs of easing supply-side strains for most of the year.
Further negativity emerged from a row between Saudi Arabia and its allies over alleged terrorist financing from Qatar. Many of the major players in that row are members of the Organization of Petroleum Exporting Countries and the divide cast doubts over a unified effort to balance the market through managed production declines.
Qatar Petroleum offered assurances, however, that it would do whatever it takes to ensure market stabilization for its customers, included those aligned with Saudi Arabia.
Market assurances and expectations of an anomaly in last week's EIA figures added to recovery in crude oil prices early Monday. The price for Brent crude oil was up 1.6 percent about 15 minutes before the start of trading to $48.92 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 1.57 percent to $46.55 per barrel.
Support for Monday's rally came in part from sources close to OPEC who told the Kuwait News Agency, KUNA, that deeper cuts may be needed to balance the oversupplied market. With U.S. shale proving resilient to lower oil prices, the source said on condition of anonymity that as much as 2.5 million barrels per day should be sidelined, rather than the 1.8 million barrels per day idled by parties to the OPEC-led agreement.
Stephen Brennock, an analyst with London oil broker PVM, said supply-side strains could "begin in earnest" during the next quarter and give support to crude oil prices.
"Given its standing as an international crude marker, this rebalancing is expected to provide a greater degree of price support for Brent compared to its U.S. peer," he said in a daily emailed newsletter.