Oil up 11 percent after two-day rally; trade volatile on stock builds
By Barani Krishnan
NEW YORK (Reuters) - Oil prices rose strongly again on Monday, tacking on a total of 11 percent over two straight sessions, as some investors bet that a bottom had formed to the seven-month long rout on the market even as others remained pessimistic.
Benchmark Brent and U.S. oil futures swung in a band of about $4 a barrel, one of their widest in weeks, as near-term technical signals indicated further gains while fundamental data continued to weigh on the market.
"We could get a pretty good bear market correction here to really mess up all the new shorts," said Walter Zimmerman, chief technical analyst at United-ICAP in Jersey City, New Jersey.
"In fact, at this point, I would rather just take profits on shorts and resell if the price low is broken, then just adding to shorts. I absolutely do not want to be adding to shorts down here."
Zimmerman said Brent could rise to over $61 a barrel and U.S. crude above $59 as oil prices snap out of oversold territory for the first time in months on concerns that falling U.S. oil rig counts may rein in a market glut.
The spread between Brent and U.S. crude widened to above $5 a barrel, its widest since November.
"I don't think anything's changed fundamentally, except for the psychology of the market," said Chandravir Ahuja, an analyst at Kolmar Americas Inc in Bridgeport, Connecticut. "We're moving a lot more on headlines that we probably would on a normal day."
Brent settled up $1.76, or 3.3 percent, at $54.75 a barrel, swinging between a session high of $55.62 and a low of $51.41. Continued...