Oil gains, as the bullish bets on an increasing oil price hit a record high

On Monday, the oil price rose as investors showed record confidence in the oil price further increasing, though the gains were capped by the prospect of a quicker growth in the U.S. production of oil.

There was an increase of 52 cents for Brent crude oil (LCOc1) to {currency}56.51 a barrel by 12:24 GMT, while U.S. West Texas Intermediate (CLc1) increased by 42 cents to {currency}54.41.

Investors raised their bets on the increasing Brent crude oil prices to a new high last week, data from the InterContinental Exchanges displayed on Monday, ending the 500,000-lot mark fir the first time on record. [O/ICE]

Money managers too raised their bullish U.S. crude futures and options positions in the week to February 21 to the highest on record, stated the U.S. Commodity Futures Trading Commission (CFTC) on Friday.

Now the investors hold 951,312 lots’worth of U.S. and Brent crude futures and options, with an equivalent to almost 1 billion barrels of oil and valued at over {currency}52 billion, based on the current Brent and WTI benchmark oil prices.

“With the speculators raising their bullish bets on U.S. crude to an all-time high, the risk of disappointment and subsequent downward spiral in prices has never been greater,” said oil brokerage PVM’s Stephen Brennock.

Among the risks is the level of compliance with the deal between the Organization of the Petroleum Exporting Countries (OPEC) and other products to lower the oil output by approximately 1.8 million barrels per day (bpd).

The record compliance of the OPEC with the deal has surprised the marker. The biggest laggards, Iraq and the United Arab Emirates, have pledged to catch up with their targets.

The International Energy Agency placed OPEC’s average compliance in January at a record 90 percent. Compliance stands at 88 percent, based on a Reuters average of production surveys.

A survey by Reuters of OPEC production later on this week will displace the compliance for February.

In the week of February 24, U.S. drillers added five oil rigs to 602, the most since October 2015, stated energy services firm Baker Hughes Inc (N:BHI) on Friday.

Over the last two weeks, the U.S. implied that the shale oil price count increased by 15.

“[This] is slightly higher that the projected seven rigs per week for the first half of 2017,” noted chief commodities analyst at Nordic bank SEB, Bjarne Schieldrop.

The bank has adjusted its dynamic price prediction for 2019 to slightly lower, to {currency}67.90 from {currency}68.30 per barrel.