* Financial traders pour new cash into crude long positions
* Physical oil markets remain bloated
* U.S. drilling for new oil rises for record 21 weeks (Updates with comment, refreshes prices; changes dateline from SINGAPORE)
LONDON, June 12 (Reuters) - Oil rose on Monday to break a three-day losing streak, after futures traders increased their bets on a renewed price upswing even though physical markets remain bloated, especially from a relentless rise in U.S. drilling.
Brent crude futures had risen 23 cents to $48.38 per barrel by 0900 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 17 cents to $46.00 per barrel.
Traders said the price rises came as data showed speculative traders had increased their investment in crude futures by taking on large volumes of long positions.
Brent and WTI futures have lost around 10 percent in value since May 25, when the Organization of the Petroleum Exporting Countries and 11 of its partners extended a restriction on supply into the first quarter of 2018.
"Oil bulls have reset for a technical bounce," said Stephen Schork, author of the Schork Report.
While financial traders have confidence in rising prices, the physical market remains under pressure, especially due to a rise in U.S. drilling for new oil production.
U.S. drillers added eight oil rigs in the week to June 9 <RIG-OL-USA-BHI>, bringing the total count to 741, the most since April 2015, energy services firm Baker Hughes Inc said on Friday.
This drive to find new oil has pushed up U.S. output by more than 10 percent since mid-2016, to 9.3 million barrels per day (bpd). The U.S. Energy Information Administration says that figure will likely rise above 10 million bpd by next year, challenging top exporter Saudi Arabia.
Soaring U.S. output undermines OPEC-led efforts to cut almost 1.8 million bpd of production until the first quarter of 2018 in order to prop up prices.
Saudi Arabia will supply full contracted volumes of crude to at least five Asian buyers in July, industry sources with knowledge of the matter said on Monday.
The oil price hit one-month lows last week, as evidence of rising output beyond the United States, in the likes of Libya and Nigeria, added to investor bearishness over supply.
"With the typically tighter second half of the year fast approaching, rumours of oil prices having found their bottom are doing the rounds," PVM Oil Associates analyst Stephen Brennock said in a note.
"Yet such claims are premature as lingering doubts that prolonged OPEC curbs will drain the oil glut along with the simultaneous uptick in U.S., Libyan and Nigerian output make for a bearish cocktail." (Additional reporting by Henning Gloystein in SINGPORE; Editing by Dale Hudson)