Oil Gets Week Off To A Slow Start With U.S. Output, Iran In Focus

Investing.com – Crude prices started the week in negative territory on Monday, weighed down by a rise in U.S. drilling for new production as on whether the U.S. would reimpose sanctions on Iran.

New York-traded lost 79 cents, or roughly 1.1%, to $67.31 a barrel by 3:45AM ET (0745GMT).

Meanwhile, , the benchmark for oil prices outside the U.S., dipped 90 cents, or 1.2%, to $72.90 a barrel.

The global benchmark breached the symbolic $75-a-barrel threshold last week for the first time since late 2014 amid speculation the United States will renew sanctions against Iran, a major Middle East oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC).

That would likely result in a reduction of Iran’s oil exports, which would further tighten global supplies.

The Trump administration has until May 12 to make a decision.

Meanwhile, a steady increase in U.S. drilling for new production marked one of the few factors tamping back crude in an otherwise bullish environment.

U.S. drillers added five oil rigs in the week to April 27, bringing the total count to , General Electric (NYSE:)’s Baker Hughes energy services firm said in its closely followed report on Friday.

That was the highest number since March 2015, underscoring worries about rising U.S. output.

Indeed, domestic oil production – driven by shale extraction – rose to an all-time high of 10.59 million barrels per day (bpd) last week, the Energy Information Administration (EIA) said.

Only Russia currently produces more, at around 11 million bpd.

Yet, underlying sentiment in the oil market remained positive amid ongoing investor expectations that OPEC-led supply cuts would continue to rid the market of excess supplies.

OPEC and 10 producers outside the cartel, including Russia, have been holding back oil output by around 1.8 million bpd since the start of last year to slash global inventories to the five year-average. The arrangement is set to expire at the end of 2018.

OPEC will meet in June to decide whether the production-cut agreement should be adjusted based on market conditions.

, oil traders will await fresh data on U.S. commercial crude inventories on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise.

Comments from global oil producers for additional signals on whether they plan to extend their current production-cut agreement into next year will also remain on the forefront.

Geopolitics will also likely keep investors on their toes this week.

In other energy trading, slumped 1.3% to $2.101 a gallon, while dropped 1.1% to $2.111 a gallon.

were a shade lower at $2.766 per million British thermal units.

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