ISLAMABAD: Oil prices have drifted lower, with the market lacking major news for direction as traders continue to worry about abundant global supplies of crude oil.
The US benchmark, West Texas Intermediate (WTI) for June delivery, fell US22c to close at $US58.93 a barrel on the New York Mercantile Exchange on Monday.
In London, Brent North Sea crude for June delivery, the global benchmark, settled barely unchanged at $US66.45 a barrel, down US1c from Friday’s closing level. In Britain, banks and many other businesses were closed Monday for a public holiday.
“There wasn’t very much news,” acknowledged Bart Melek of TD Securities.
“What’s happening is people continue to have concern about oversupply down the road,” Mr Melek said. “OPEC is producing at 31.3 million barrels (per day), US production is not dropping very quickly and, as such, this week’s inventories could very well prove to be a big downside mover for the WTI.”
Expectations of a drop in robust US crude oil production had helped to propel the oil market’s rise in recent weeks.
Also impacting oil markets was a bounce in the US dollar after its recent falls had spurred gains in commodity prices.
“As the new week of trading gets underway, oil prices are trading only marginally below the multi-month highs they recorded at the end of last week,” Commerzbank analysts said in a research note.
“In the past month alone, Brent has risen by 21 per cent and WTI by 25 per cent, the steepest monthly increase in each case since May 2009. There is no fundamental justification for the oil price surge of recent weeks, which is attributable first and foremost to speculation about lower supply in the second half of the year.”
