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Oil rises as traders shut down short positions, U.S. producers cut rig count

Published 07/03/2016, 11:38 am
Updated 07/03/2016, 11:40 am
© Reuters.  Oil rises as traders shut down short positions, U.S. producers cut rig count
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* Brent jumps above $39/barrel for 1st time since January

* U.S. rig count down 11th straight week to lowest since 2009

By Henning Gloystein

SINGAPORE, March 7 (Reuters) - Oil prices opened strongly on Monday after rallying in the previous session, as tightening supplies supported the market and sentiment around a market recovery strengthened.

Front-month Brent LCOc1 crude futures were trading at $39.08 per barrel at 0019 GMT, up 36 cents from their last settlement.

U.S. West Texas Intermediate (WTI) futures were trading at $36.28 a barrel, up 36 cents and from their last close and 40 percent above February lows.

"U.S. shale producers continue to pull rigs from the ground in an effort to conserve capital," ANZ bank said on Monday.

U.S. energy firms last week cut oil rigs for an 11th week in a row to the lowest level since December 2009, data showed on Friday, as producers slashed their drilling rig count to focus on uncompleted wells amid low oil prices.

Drillers removed eight oil rigs in the week ended March 4, bringing the total rig count down to 392, oil services company Baker Hughes Inc BHI.N said in its closely followed report. RIG-OL-USA-BHI

Beyond a tightening supply outlook, ANZ said that a shift in sentiment was also pushing prices as traders shut down short positions that had bet on further falls in prices.

"Short-covering in commodities continues to push prices higher. This week's slew of economic data releases in China, however, will determine if this rally continues," the bank said.

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