BCS Barclays PLC

Oil prices rose Monday as stronger margins for refiners provided support to the market despite the continuing glut of crude supply.

The October contract for global benchmark Brent gained 1.1% to $44.75 a barrel by midmorning in London, while U.S. counterpart West Texas Intermediate increased 1.2% to $42.30 for September deliveries.

Several factors have boosted oil prices over the past three trading days.

Olivier Jakob from Swiss-based Petromatrix cited an improvement in the gasoline crack margin, a technical term for the price difference between crude oil and the figure refiners charge for gasoline, as providing a tailwind for the market.

"The gasoline crack [margin] has rebounded and stabilized and this has relieved the pressure on oil prices a little bit," he said. "This week has some upside potential [for oil prices], but the fundamentals are not there for any sustained recovery."

He added that the fundamentals for gasoline hadn't changed and there was a large global oversupply, which should keep prices below $45 a barrel.

Some analysts pointed to a potential benefit from prices staying that low. The price decline to the low $40s should spur demand growth in developing nations, aided by both the weaker dollar and lower costs for refined products such as diesel and gasoline, London-based Barclays PLC said in a note.

That prediction led the bank to reiterate its price forecast for the third quarter of $45 a barrel. The bank foresees stronger demand driving prices back up to the $50 a barrel mark by the fourth quarter of 2016.

Many market participants have also cited the spike in the number of short net positions since June as having the potential to drive prices higher until the end of August.

A short net position is a market term for when a trader bets the market will fall. This means oil will be sold at a higher price then bought back later for a lower price with the trader keeping the difference.

The Dutch ABN Ambro bank said in a note the number of outstanding contracts for these short net positions has risen 70% since June, meaning a heavy round of buying by traders is inevitable in the near future.

The last time this happened was earlier in the year and it played a huge role in oil's recovery from sub-$30 to over $50 a barrel.

Nymex reformulated gasoline blendstock for August—the benchmark gasoline contract—was up by 0.2% at $1.379 a gallon.

ICE gas oil changed hands at $387.5 a metric ton, up $9.25 from Friday's settlement.

Write to Kevin Baxter at Kevin.Baxter@wsj.com

(END) Dow Jones Newswires

August 08, 2016 06:35 ET (10:35 GMT)

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