Oil Market Update (April 3, 2012)

By Adam Currie — Exclusive to Oil Investing News

Market speculators were bullish on Brent crude prices last week as fears relating to supply disruptions increased, although many do not expect the trend to hold for much longer.

According to IntercontinentalExchange Inc.‘s (NYSE:ICE) weekly Commitment of Traders report, published on Monday, money managers have raised positions in Brent crude futures and options by 8.1 percent compared with the week before, to 150,883 contracts.

David Wech,  head of research at JBC Energy said in an interview, “the further increase suggests that money managers are still betting on a further deterioration of supplies, while some may also hope for a US-led economic recovery.”

Wech went on to point out issues including supply concerns in Iran as well as technical supply issues, including an accident at the Chevron Corp.-operated (NYSE:CVX) Frade field in Brazil’s offshore Campos Basin, where more than 90 percent of the country’s crude is produced.

It is reported that the accident caused an estimated 2,400 to 3,000 barrels of crude to seep into the Atlantic Ocean from cracks in the seabed.

Meanwhile, equity markets edged up and crude oil rebounded on Monday after a better-than-expected recording of business activity in the US manufacturing sector lifted investor sentiment that had initially shown a negative feel on the back of weak European factory data.

Brent crude futures gained $1.30 a barrel last week on reports that Iran had reduced its oil exports, renewing concerns about supply disruptions.