Price Of Oil Rises Amid Stock Market Volatility

By Sri Jegarajah

The risk of a disorderly decline in benchmark U.S. crude futures is growing after a four-week rally sent prices to 16-month highs and money managers amassed record bullish bets, defying an economic slowdown in China and the North American shale energy supply boom.

WTI (West Texas Intermediate, the oil grade underpinning the U.S. crude futures benchmark) on Friday flipped to a slight premium over its Brent counterpart for the first time in three years, reflecting stronger refiner demand, U.S. economic optimism and efforts to drain the supply glut at the WTI oil storage hub of Cushing, Oklahoma. Brent held a mere seven cents a barrel premium over its U.S. rival at $108.39 early on Monday morning.

Although bullish momentum may continue to favor U.S. crude, WTI appears over-priced at current levels near $110 a barrel and a well-overdue reversal should bring the market closer in line with fundamentals, according to traders, strategists and analysts contacted by CNBC. Any softness in scheduled U.S. or China economic data releases this week may be the catalyst for the pullback, they added.

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