Oil prices fall after three straight weeks of gains
On Monday, oil prices fell slightly in trading after the Easter weekend following three consecutive weeks of gains. Strong economic growth in China and a weaker US dollar helped limit losses.
According to a Reuters report, strong investment last month, retail sales and exports all point to China, the second largest oil consumer, carrying strong economic momentum into spring.
The US Energy Information Agency (EIA) said on Monday that US shale production was set for its largest monthly increase in over two years. The expected increase in output added to worries that the crude market would be brought back to balance.
One analyst, Robert Yawger told Reuters that market conditions encouraged profit taking. Speculators in the week to April 11 also boosted their bets on strong performance in both contracts.
“The market was overbought so these people are definitely booking profits at this point,” said Yawger, director of energy futures at Mizuho Americas.
Benchmark Brent crude futures ended the session 53 cents lower at $55.36 while U.S. West Texas Intermediate (WTI) crude futures settled down 53 cents at $52.65 a barrel.
Volumes were thin, with about 152,000 Brent futures contracts and about 296,000 WTI contracts changing hands, less than half of Thursday’s trading volumes.
Reuters reports trading volume was thin, with about half of Thursday’s trading volumes.
Many analysts are concerned about rising global tensions. Mark Watkins, regional investment strategist at the Private Client Group at US Bank in Park City Utah told Reuters “The biggest issues right now are going to geopolitical in nature.”
“Right now all eyes are on the Korean peninsula and that may cause a little instability with the markets as a whole … between now and the OPEC meeting, that will be the number one thing to watch”
US Vice President Mike Pence warned North Korea that strikes by the US in Syria, one of North Korea’s few close allies, and Afghanistan show that the East Asian country should not test the resolve of President Trump.
Tensions between North Korea and the United States have led to a fall in the value of the US dollar as investors look to Japanese currency for safety.
Another factor in oil prices is fighting in Libya which has cut the African nation’s oil output, but the state-owned National Oil Corporation says it has opened at least one field.