Oil drops more than 1% amidst oversupply apprehensions
After hefty losses last week, oil prices resumed drop on Monday amid lingering oversupply concerns on high production by the United States as well as OPEC and non-OPEC producers.
Brent crude tumbled more than 1 percent to a low of $46.10 a barrel, while currently trading at $46.30, set for the fourth daily decline out of five.
Crude oil dipped to $43.85 a barrel from the session’s open at $44.57, after shaving nearly 3.6 percent last week.
Baker Hughes report on U.S. rig count released on Friday showed a rise in oil drilling rigs by seven to 763, the highest since April 2015.
Oil production by the U.S. has been rising since mid-2016 causing a glut in the market and thereby putting pressure on energy prices.
While OPEC and non-OPEC members have reached a deal to cut production until March 2018, the effect of the deal has faded quickly.
“Kuwait said on Sunday that Nigeria and Libya had been invited to the meeting and their production could be capped earlier than November, when OPEC is scheduled to hold formal talks,” according to Bloomberg.
Ministers of Kuwait, Venezuela, Algeria, Saudi Arabia, Russia and Oman will meet on July 24 in St Petersburg, Russia, to assess the undergoing output and prices.
Most recent data showed that OPEC’s production stands at the highest level this year.
Another pressure on oil prices could stem from rebound attempts by the U.S. dollar, which, if recovered, would lower demand on all dollar-denominated commodities.
The dollar index traded higher today at 96.11 after ending last week on a gain.
Gold remained under pressure as it traded near four-month lows at $121.70 an ounce after hitting a low of $1204.61 earlier in the session.
It is worthwhile to mention
the low oil prices directly weigh on energy shares, while affect central banks’
monetary policy as it keeps inflation below targeted levels.