Talk of an output freeze by OPEC and Russia along with falling U.S. production spurred money managers to bet oil is ready for a rebound.

Prices have risen 13 percent since Saudi Arabia, Russia, Venezuela and Qatar tentatively agreed on Feb. 16 to cap production at January levels. U.S. crude output dropped for a fifth week, government data showed Feb. 24.

Hedge funds and other speculators increased their net-long position in West Texas Intermediate futures and options by 14 percent to the highest level since November in the week ended Feb. 23, according to U.S. Commodity Futures Trading Commission data. WTI advanced 9.7 percent to $31.87 a barrel in the report week on the New York Mercantile Exchange. Prices on Monday were little changed at $32.79 as of 10:29 a.m. London time.

“Talk of an output freeze scared a lot of the weaker shorts,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “There’s been a lot of talk and no action yet, but it’s had an impact. The fundamentals of the market haven’t changed.”

The Feb. 16 agreement reached in Doha marked the first sign of cooperation between OPEC and non-members since oil prices began to slide in 2014. Saudi Arabia won’t cut oil production as other countries would be unlikely to assist in restraining output, Petroleum Minister Ali Al-Naimi said at the IHS CERAWeek conference in Houston last week, leaving the burden of adjusting supply with high-cost producers.

U.S. Output

U.S. crude production fell by 33,000 barrels a day to 9.1 million in the week ended Feb. 19, the lowest since October, according to the Energy Information Administration. Rigs targeting oil in U.S. fields declined to 400 last week, the lowest since December 2009, Baker Hughes Inc. said on its website.

“We’re in the midst of a downturn in production,” said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees $128 billion of assets. “We’re heading in the right direction and production should be down substantially more a couple months out.”

Speculators’ net-long position in WTI rose by 13,385 contracts to 110,554, CFTC data show. Shorts, or bets that prices will decline, slipped 6.7 percent while longs climbed 0.2 percent.

Other Markets

In other markets, net bearish wagers on U.S. ultra low sulfur diesel increased 17 percent to 22,797 contracts. Diesel futures slipped 0.5 percent in the period. Net bullish bets on Nymex gasoline slumped 15 percent to 20,340 contracts as futures dropped 0.5 percent. 

Global oil production totaled 95.16 million barrels a day in January, outpacing demand of 93.15 million, the EIA said Feb. 9. World supply may exceed consumption by an average of 1.75 million barrels a day in the first half of the year, the International Energy Agency said in a report released the same day. 

“We might be starting to chip away at the surplus but have a long way to go before the market moves back into balance,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York.