The gain maintained expectations that US oil production would continue to rise in the short term which would also increase concerns surrounding US over-supply.
Over the weekend, there were talks between OPEC and non-OPEC members with an agreement to review whether or not the six-month agreement to curb oil production should be extended.
Increased concerns surrounding the impact of rising US production also widened the WTI discount over Brent crude during the European session to the highest level since late 2015.
Oil prices were unable to derive any support from the weaker dollar on Monday with crude coming under renewed selling pressure despite a weaker US currency.
The latest drilling rigs data has reinforced concerns surrounding rising US supply with the negative impact amplified by renewed doubts surrounding the growth outlook after the Administration’s failure to reform healthcare.
As it stated in
Positioning Shift And Sentiment May Pressure Oil As Supply Swells
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Oil – US Crude prices may continue to fall.
The high compliance from members of the OPEC-accord have been impressive, but we’ve consistently seen high growth in US stockpiles, which appear to be damaging OPEC’s efforts to pull the Oil market fundamentals in the right direction.
Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Oil – US Crude-bearish contrarian trading bias.
In fact, traders have remained net-long since Mar 01 when Oil – US Crude traded near 5371.6; the price has moved 8.4% lower since then.
The Oil market appears to be wholly focused right now on whether or not the OPEC accord to reduce supply so that price stockpiles come in line with the 5-year average will be extended past June.
As it stated in
Crude Oil Price Rises, Then Slips: Supply Cut Extension Deferred
Modest hopes dashed: Brent crude oil priceWould you like to get live, interac t ive coverage of major, market-moving economic news?
It has taken crude prices above $50/barrel, but they don’t look comfortable there, especially as US shale-oil production rises.
In any case the lack of an immediate extension to the output cut has weighed on oil prices as a new week gets under way in Asia.
An earlier draft of the statement had said that the committee reported a “high level of conformity” and “recommends” a six-month extension.
A joint committee of producers fro m within and outside the Organiz ation of Petroleum Exporting Countries (OPEC), has agreed to review an extension of last year’s agreement to cut production by six months.
collected by :Molly Tony