Oil down 1 percent on continued concerns over US output

Traders work on the floor at the New York Stock Exchange in Manhattan New York

Traders work on the floor at the New York Stock Exchange in Manhattan New York

Crude oil prices fell Monday ahead of closely watched United States inflation data that may set the stage for interest rate hikes.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed early Monday. Gross short positions on the New York Mercantile Exchange climbed to their highest in almost a month.

The most significant price action this week is likely to take place after the release of the American Petroleum Institute's weekly inventories report on Tuesday and Wednesday's U.S. Energy Information Administration report.

Crude production from seven major US shale plays is expected to see a climb of 131,000 barrels a day in April to 6.954 million barrels a day, according to a monthly report from the Energy Information Administration released Monday (http://www.marketwatch.com/story/US-shale-oil-output-forecast-to-climb-by-131000-barrels-a-day-in-april-eia-2018-03-12).

Meanwhile, data out Friday did show that hedge funds and money managers cut their bullish bets on USA crude oil for the first time in three weeks.

The Organization of the Petroleum Exporting Countries (Opec), together with a group of other producers led by Russian Federation, has been withholding production since the start of 2017 to prop up prices.


In oil markets, U.S. energy companies last week cut oil rigs for the first time in nearly two months, with drillers cutting back four rigs, to 796, Baker Hughes energy services firm said on Friday.

"We are maintaining a bearish trading stance in anticipation of a range in nearby WTI between about US$58 and US$63, Jim Ritterbusch, president of Ritterbusch and Associates, said in a note".

He went on to state that while Friday's favourable job data from the USA and the first decline in rig counts in two months "might suggest a test of the high side of this expected range first, we still view downside price risk exceeding that to the upside".

It is not clear when the deal to withhold output will end, but Iranian oil minister Bijan Zanganeh said Opec could agree in June to begin easing current oil production curbs in 2019, the Wall Street Journal reported yesterday.

Crude oil prices reached $65 on Monday after a drop in prices earlier in the year.

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