Crude oil futures fell on Monday on warmer weather and confirmation from the Organisation of the Petroleum Exporting Countries that it had increased output further above its official quota in a bid to cool prices.

However, prices bounced higher at the end of the session amid technical buying.

Increased Opec production also has the effect of reducing the cartel’s spare production capacity, which Opec said currently stood at more than 2m barrels a day, providing a relatively small buffer in the event of a large disruption to supply or a further increase in demand.

IPE Brent for April delivery settled 29 cents up to $52.09 a barrel in London, and down from last week’s record high of $53. April Nymex WTI inched up 11 cents to $53.89 a barrel in New York.

Opec said in a statement issued over the weekend that it was producing about 29.5m b/d, and said it would ensure that demand was fully met. The interpretation placed on the statement was that the oil cartel would keep quotas unchanged at 27m b/d at the group’s meeting in Isfahan, Iran on March 16.

The rising oil price has been accompanied by increased interest among hedge funds in US crude futures. Speculative funds boosted their net long position, a bet on rising prices, in the West Texas Intermediate futures contract to 60,173 contracts, its highest level since June 2004, according to the latest data from the Commodity Futures Trading Commission. The CFTC said gross long interest rose almost 10,000 contracts to 130,797, highest since early October.

“As concerns over cold weather fade, oil prices could conceivably fall back to the high $40s, but the potential for oil prices to fall considerably below that level because of fund liquidation is small,” said Barclays Capital in a research note.

Gold was slightly firmer in late London trade. Bullion was quoted at $434.30/$435.10 a troy ounce, up from Friday’s late quote of $434.00/$434.80.

There was more volatile trade in the agricultural futures markets, with coffee reaching a five-year high in New York.

The May arabica hit an intraday peak of $1.29 a pound on the New York Board of Trade, its highest level since December 1999, before easing to $1.28, up 3.95 cents on the day.

Arabica futures prices have risen more than 60 per cent since the end of October on prospects of a global supply deficit, which has attracted increased speculative and fund demand in the futures market. Robusta coffee futures were $17 higher at $976 a tonne in London, near their highest level in 4½ years.

The rise in coffee prices came as Brazil reported a lift in coffee exports in February on a year ago.

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