The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO) have gotten a lift in recent sessions as oil prices have ascended to their highest levels since June, but an oversupplied markets remains an issue for crude.
OPEC has kept up production to pressure high-cost rivals, such as the developing U.S. shale oil producers. The International Energy Agency expects it will take several years before OPEC can effectively price out high-cost producers.
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Many traders remain bearish over the short-term, betting on weakening seasonal trends. Money managers increased wagers on declines in oil prices to a record on increasing U.S. inventories and ahead of a seasonal refinery maintenance that will curb crude demand – futures have dipped in each of the past five Septembers, reports Mark Shenk for Bloomberg.
U.S. shale drillers have been paring production in an effort to improve profitability, but some OPEC members and other major producers, including Russia, continue pumping despite lower prices. That scenario is seen as a significant headwind for oil price upside.