* Financial traders pour new cash into crude long positions
* But physical oil markets remain bloated
* U.S. drilling for new oil rises for record 21 weeks (Adds comment, updates prices)
SINGAPORE, June 12 (Reuters) - Oil prices rose on Monday as futures traders bet the market may have bottomed after a recent steep fall, even as physical markets remain bloated by oversupply, especially from a relentless rise in U.S. drilling.
Brent crude futures were trading at $48.41 per barrel at 0246 GMT, up 26 cents, or 0.5 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $46.07 per barrel, up 24 cents, or 0.5 percent.
Traders said that the price rises came on the back of speculative traders upping their investment into crude futures, by taking on large volumes of long positions, which would profit from a further price rise.
The rise in new long positions comes after Brent and WTI crude futures have fallen by around 10 percent below their opening levels on May 25, when an OPEC-led policy to cut oil output was extended to cover the first quarter of 2018 instead of expiring this June.
"Wall Street's oil bulls have reset for a technical bounce," said Stephen Schork, author of the Schork Report, which specializes in oil and gas market analysis.
While the financial market seems to have some confidence that prices may have bottomed out, the physical market remains bloated, especially due to a rise in U.S. drilling for new oil production.
U.S. energy firms added eight oil rigs in the week to June 9 <RIG-OL-USA-BHI>, bringing the total count up to 741, the most since April 2015, energy services firm Baker Hughes Inc said on Friday.
This ongoing drive to find new oil has driven up U.S. output by more than 10 percent since mid-2016, to over 9.3 million bpd, a figure the U.S. Energy Information Administration (EIA) says will likely rise above 10 million bpd by next year, challenging top exporter Saudi Arabia.
Soaring U.S. output threatens to undermine an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to cut almost 1.8 million bpd of production until the first quarter of 2018 in order to tighten markets and prop up prices.
Despite this, Russian energy minister Alexander Novak said on Sunday said on Sunday there was no need to review the agreement on reducing oil output as it was too early to make any decisions.
Russia, not a member of OPEC, is the world's biggest oil producer but it is participating in the production cuts.
Saudi energy minister Khalid Al-Falih made similar statements over the weekend. (Reporting by Henning Gloystein; Editing by Richard Pullin and Joseph Radford)