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WTI Rebounds Following Biggest Weekly Drop in Six Months

West Texas Intermediate oil rebounded after its biggest weekly drop in six months, snapping three days of losses. Brent’s premium to New York crude was near the smallest it has been since June.

Futures gained as much as 1.1 percent in New York after falling 4.7 percent last week, the biggest drop since the period ended Sept. 21. The main rebel group in Nigeria, Africa’s largest crude producer, said it killed 15 security personnel in an attack in the southern oil-producing Bayelsa state. Net-long positions in WTI held by money managers climbed 3.2 percent in the seven days ended April 2, and by 8.9 percent for Brent, separate reports showed.

“We really have seen the bottom in the oil price after the recent selloff,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London.

WTI for May delivery advanced as much as $1.05 to $93.75 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.40 at 1:21 p.m. in London. The contract slid 56 cents to $92.70 on April 5, the lowest closing price since March 21.

Brent for May settlement rose $1.19 to trade at $105.31 a barrel on the London-based ICE Futures Europe exchange. The contract slumped 2.1 percent to $104.12 on April 5. The European benchmark grade was at a premium of $11.83 to WTI. It closed at $11.42 on April 5, the narrowest settlement since June 22. The volume of all WTI futures traded was 32 percent below the 100- day average, while Brent was 35 percent higher.

Brent Contango

Brent futures for May settlement traded at a discount of 6 cents to the June contract, a situation known as a contango market, where prompt supplies cost less than those for later delivery. Front-month prices fell below second-month prices for the first time since June 2012 on April 5.

Oil in New York has technical support along its 100-day moving average, about $92.14 a barrel today, according to data compiled by Bloomberg. Futures on April 5 halted an intraday decline near that indicator for a second day. Buy orders tend to be clustered close to chart-support levels.

Net-long positions in WTI held by money managers, including hedge funds, climbed by 6,281 futures and options combined to 205,410, according to the Commodity Futures Trading Commission’s April 5 Commitments of Traders report. In London, hedge funds and other money managers raised bullish bets on Brent crude by the most in two months, according to data from ICE Futures Europe.

Speculative Bets

Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 142,092 lots in the week ended April 2, the London-based exchange said today in its weekly Commitment of Traders report. The increase of 11,619 lots, or 8.9 percent, is the biggest in terms of contract numbers since Feb. 5 and the largest in percentage terms since Jan. 29.

Nigeria’s Movement for the Emancipation of the Niger Delta said on April 3 it would resume attacks in the country after its suspected leader, Henry Okah, was sentenced to 24 years in prison in South Africa on terrorism charges. Okah denies being a leader of the group.

Attacks including kidnappings and bombings of installations by groups such as MEND reduced Nigeria’s oil output by more than 28 percent between 2006 and 2009, according to data compiled by Bloomberg. Violence declined after thousands of fighters accepted a government amnesty offer in 2009.

Iran Talks

Iran and a group consisting of the U.S., Britain, France, China, Russia and Germany failed to reach an interim deal on the Gulf nation’s nuclear work during negotiations in Almaty, Kazakhstan, that ended on April 6. This may mean more pressure for additional sanctions on the fifth-biggest producer in the Organization of Petroleum Exporting Countries.

Two days of talks left the sides “far apart in substance,” European Union foreign policy chief Catherine Ashton said on behalf of the group. Diplomats didn’t announce plans for new talks on Iran’s nuclear program, which the U.S. and its allies suspect is an effort to develop technology needed to produce weapons. Iran says the program is designed solely for power generation and other non-military uses.

Norwegian unions and employers reached an agreement in collective bargaining talks that extended beyond a midnight deadline, averting a strike that would have started today and curbed offshore oil production for the second time in less than a year.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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