You are here
Oil falls as traders cash in after 3 weeks of gains
[SINGAPORE] Oil prices fell early on Monday as traders took profits after three weeks of gains and as a jump in the US dollar late last week was priced into fuel markets.
Front-month Brent crude futures were trading at US$44.66 per barrel at 0043 GMT, down 45 US cents, or one per cent, from their last settlement.
US West Texas Intermediate (WTI) futures were down around half a US dollar, or 1.2 per cent, at US$43.22 a barrel.
Analysts said the price drops were largely a result of cashing in after three weeks of rising prices.
"I guess (there's been) some profit taking after a strong rally into the end of last week," said Virendra Chauhan of Energy Aspects in Singapore.
Market data shows that the amount of open positions betting on rising WTI prices rose to levels last seen in June 2015 last week. At the same time, the amount of deals taken out in expectations of falling prices fell close to 2016 lows and levels prior last seen in the second quarter of last year.
"If the selling pressure lasts through today, I suspect there'll be a bit of a dent in the newest data when it gets released tomorrow," said one crude trader.
A jump in the US dollar on Friday against a basket of other leading currencies on expectations that Japan will further extend its aggressive monetary easing through negative interest rates, also dented oil.
A stronger US dollar, in which oil is traded, makes fuel imports for countries using other currencies more expensive, potentially hitting demand.
Monday's early oil price drops came despite another decline in the US rig-count that brings activity down for a fifth straight week and to levels last seen in Nov 2009.
A total of 343 rigs were drilling for new oil last week. That compares to over 700 this time last year, according to oil services company Baker Hughes Inc on Friday.
Energy firms have sharply reduced oil and gas drilling since the collapse in crude markets began in mid-2014, bringing down prices by as much as 70 per cent to 13-year lows earlier this year.