Crude-oil bulls threatened as shale patch revives drilling plans

[NEW YORK] The rally in crude oil is reviving the US shale boom, threatening speculators who are the most bullish on prices since July.

Money managers increased their net-long position in West Texas Intermediate crude by 3.9 per cent in the seven days ended May 5, US Commodity Futures Trading Commission data show. That's a level last seen toward the start of last year's price crash. Short positions declined to the lowest this year.

A 37 per cent rebound in WTI since March has encouraged companies including EOG Resources Inc. to lay out plans to resume drilling. The shale boom had stalled amid a record decline in rigs seeking oil, and the government is predicting lower output this month. Any acceleration in drilling will raise concern that the US supply glut could worsen.

"We could soon see a second surge of production growth," Stewart Glickman, an equity analyst at S&P Capital IQ in New York, said by phone May 7. "EOG is a rather conservative company so if they are willing to dip their toes back in the water, others will as well." WTI futures gained $3.34 to $60.40 a barrel on the New York Mercantile Exchange in the period covered by the CFTC report.