Oil Price Tanks
The international benchmark Brent crude was trading 2.5 percent down, at $46.91 per barrel at 11:40 GMT. US West Texas Intermediate (WTI) crude futures dropped 2.6 percent, to $44.33 per barrel.
Prices for crude have dropped more than 2 percent on Friday as official data revealed that US drillers boosted production by 1 percent over last week.
At the same time, oil exports by the members of Organization of the Petroleum Exporting Countries (OPEC) reached a 2017 high, raising investor concerns over the cartel’s ability to curb oversupply.
“We’re seeing some head-scratching today. Following a sharp rally, which was mostly driven by short-covering, the failure of Brent to break back above $50 earlier in the week has once again given sellers appetite for sending it lower,” said Ole Hansen, head of commodity strategy at Saxo Bank, as quoted by Reuters.
The US oil production grew one percent to 9.34 million barrels per day (bpd) last week, according to the government data, bouncing back from last week’s decrease.
Meanwhile, OPEC reportedly exported 25.92 million bpd last month, 450,000 bpd more than in May and 1.9 million bpd more than a year earlier.
The losses for oil futures were slightly alleviated due to reports that the cartel might impose output caps on Libya and Nigeria, which are exempted from the deal.
According to Morgan Stanley analysts, a WTI price of $46 to $50 per barrel would likely prevent US output rising in the mid- to long-term, but prices will need to be in the low $40s for US production to fall significantly.
The US bank expects WTI to remain below $50 until mid-2018.
The dollar index, which climbed 0.2 percent on Friday, was little changed at 96.01 on Monday.
The euro was marginally lower at $1.14015 on Monday, extending Friday’s 0.1 percent decline.
The Group of 20 meeting in Hamburg over the weekend didn’t have much impact on markets on Monday.
At the meeting, the world’s leading economies broke with the U.S. on climate policy and U.S. President Donald Trump and his Chinese counterpart Xi Jinping agreed to work together on North Korea’s nuclear threat and bilateral trade. Trump also discussed forming a cyber security unit to guard against election hacking with Russian President Vladimir Putin
In commodities markets, oil crept higher early on Monday after sliding on Friday on a report showing U.S. crude production rose last week, just as OPEC exports hit a 2017 high, rekindling concerns about a supply glut.
U.S. oil rose 0.6 percent to $44.51 a barrel on Monday, making up some of Friday’s 2.8 percent loss.
Global benchmark Brent advanced 0.6 percent to $47.01, following Friday’s 2.9 percent slide.
Gold was steady at $1,212.56, close to the four-month low touched on Friday as the dollar surged.
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