U.S. West Texas Intermediate and international-benchmark Brent crude oil are on pace to post another weekly gain although Brent is looking a little shaky on the daily chart.
WTI crude oil is heading for a fourth straight weekly gain and could close as much as 9 percent higher on the monthly chart. Brent is also up about 9 percent for September and is also in a position to post its fifth consecutively weekly gain. Brent may also post its strongest third quarter in 13 years.
Although both contracts surged earlier in the week, prices were limited by resistance and generally overbought technical levels. Prices continued to be supported by expectations of greater demand due to forecasts from OPEC and the International Energy Administration.
Additionally, buyers are even more optimistic that higher prices will encourage OPEC and other major non-OPEC producers to extend their current production cuts to perhaps the end of 2018.
Hedge fund buying is also driving up prices. Current data supports the notion that the hedge funds have been fairly aggressive lately. According to the U.S. Commodity Futures Trading Commission, hedge funds raised their bullish bets on U.S. crude oil futures to the highest level in four weeks. Additionally, they also reduced short positions for a third straight week through September 19.
This week’s price action suggests that the argument for a bear market is being blown up by the aggressive buying. While there has been a…