Oil Flat As Investors Maintain Convictions Of Continued Market Health

But Bloomberg warns that futures may be overbought: File Image/Pixabay

An unexceptional oil trading session on Monday led to minuscule losses for two key benchmarks as investors continued to show faith in the prospect of steady global demand - as well as continued global supply tightness - despite inflationary headwinds.

Brent settled down 1 cent to $90.64 per barrel while West Texas Intermediate settled down 22 cents to $87.29.

Money managers now hold the biggest net long position in WTI in 15 months and have added to bets for gains in Brent, at a time when Saudi Arabia and Russia have vowed to extend their production cuts to later this year as the market warrants.

Still, Bloomberg on Monday warned that, "Traders are bracing for a potential pullback as technical gauges, including the relative strength index, show futures remain near overbought territory after a renewed surge over the past two and a half weeks."

For his part, Amarpreet Singh, analyst at Barclays, said in a note, "With Saudi Arabia more aggressive than expected with its unilateral cut and continuing strength in demand, we caution against fading the recent run-up."

In other oil related news on Monday, South Sudan's national planning body told media that the country's plans to assume control of oil fields from foreign companies, whose contracts expire in 2027, cannot feasibly be realized due to lack of financing and capabilities.

Sudan had planned for state-owned Nile Petroleum Corp. to take over foreign oil operations when contracts expired; meanwhile, there are growing fears that South Sudan could slide back into civil war due to discontent over how of the country's oil revenues are being distributed.