Oil prices turned around to rally on Monday after the Saudi Arabian cabinet said in a statement the kingdom remained ready to work with other producing and exporting countries to stabilize prices.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 28 cents a barrel at $42.18 a barrel by 1230 GMT, having fallen by more than 3 percent earlier on a stronger dollar.
Benchmark January Brent futures LCOc1 were up 67 cents at $45.33 a barrel.
"It’s the statement," SEB analyst Bjarne Schieldrop said. "Saudi Arabia hasn't said they won't cut, but that doesn't mean they are going to increase production either -- it’s very loose news."
Saudi Arabia has previously said it is willing to cooperate with other oil producers to maintain oil price stability, but the comments on Monday arrived as futures prices were barely holding above 2-1/2 month lows.
Big hedge funds have increased their bets that oil will continue to fall, according to data from the U.S. Commodity Futures Trading Commission (CFTC) last week. [CFTC/]
Speculators now hold more positions that are betting on a drop in the oil price than at any time since at least 2009, according to Reuters data.
Oil prices have halved over the last 12 months after OPEC decided to maintain its production levels, or even increase them, to retain market share, in part by forcing higher-cost producers elsewhere to cut output.
Morgan Stanley's commodities research team said they expected to see a rise in the physical market towards the end of the year, as refinery margins remain robust and maintenance schedules for next month are expected to be light.
But this might not be enough to underpin the broader market, they said.
"As long as markets are oversupplied, even if it's by a shrinking amount, technical factors and the U.S. dollar will remain the primary price-setting mechanisms," they said.
Read more at Reutershttp://www.reuters.com/article/2015/11/23/us-global-oil-idUSKBN0TC00O20151123#JkW2vsWYPbT3mb2X.99