The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, each jumped more than 8% in what could be the latest sign that oil is mounting a credible rebound.
Crude’s recent rally is chasing bearish traders from what was previously one of this year’s worst-performing commodities.
While the Organization of Petroleum Exporting Countries are skeptical that demand growth can put a dent into the ongoing supply glut, the oil cartel has made steps to cut down supply to bolster prices. OPEC has already promised to curb production by 1.2 million barrels per day between January this year and March 2018.
“As pessimism over oil dissipates and investors flirt with $50 a barrel again, short-sellers are getting out of the way,” reports Jessica Summers for Bloomberg. “Hedge funds are the most upbeat about West Texas Intermediate crude in three months after bets on declining prices shrank. Meanwhile, signs that the shale boom is slowing and the market is moving closer to balance set the mood for futures to jump 8.6 percent last week.”