Investing.com – Crude oil prices dipped in Asia on Monday as the market backed off a risk premium based on Middle East tensions between Arab states and Iran even as Saudi Arabia at the weekend again criticized Tehran for supporting terrorism.
U.S. West Texas Intermediate (WTI) crude futures fell 0.12% to $56.64 a barrel. Meanwhile, futures, the benchmark for oil prices outside the U.S., dipped 0.27% tot $62.56 a barrel.
In the week ahead, trade volumes are expected to remain light around Thursday’s Thanksgiving holiday and Friday’s shortened trading session.
Market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.
Last week, prices jumped on Friday, but failed to offset their first weekly loss in six weeks as fears over rising U.S. output persisted, while falling expectations for an extension of OPEC-led output curbs weighed on sentiment.
Despite rising sharply on Friday, crude oil futures failed to pare losses made earlier in the week amid ongoing investor fears that rising U.S. output would dampen OPEC’s efforts to rid the market of excess supplies.
Preliminary U.S. production figures released during the week showed weekly output increased by 25,000 barrels per day (bpd) to an all-time high of 9.65 million, while crude oil stockpiles rose for second week in a row.
Oilfield services firm Baker Hughes reported Friday that the number of active U.S. rigs drilling for oil remained unchanged from a week ago at 738. The weekly rig count is an important barometer for the drilling industry and serves as a proxy for domestic oil production.
The International Energy Agency said earlier in the week that the U.S. would account for 80% of the global increase in oil production over the next decade.
Meanwhile, growing concern that Russia was reluctant to support an extension of an existing OPEC-led production cut agreement further weighed.
Under the original terms of the deal, OPEC and 10 other non-OPEC countries led by Russia agreed to cut production by 1.8 million barrels a day (bpd) for six months. The agreement was extended in May of this year for a period of nine more months until March 2018 in a bid to reduce global oil inventories and support oil prices.
Discussions are continuing in the run-up to the Nov. 30 meeting, which oil ministers from OPEC and the participating non-OPEC countries will attend.
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Source: Investing.com
