Crude oil slipped on Monday as market players shrugged off some of their bullish bets on another price hike and the chances that top exporters will agree to rein in supply glut appeared to subside.
Oil Minister Bijan Zanganeh said that Iran will precede rising oil production and exports until it hits the market position it rejoiced before the imposition of sanctions.
Saudi Arabia leads an initial proposal in February for producers to cut production. They also noted last week that it will not participate on any effort unless Iran was on board, while Russia released its highest crude production in 30 years.
On the New York Mercantile Exchange, crude oil for May delivery sank 43 cents or 1.17 percent, to trade at $36.36 per barrel after plunging to a daily decline of $36.18, which is the lowest level since March 8.
This has created reluctance on the ability of the world’s biggest exporters to hit any such agreement when they discuss how best to align global supply and demand.
Hedge funds last week slashed their bullish holdings of crude oil futures for the first time in six weeks.
Brent crude futures dropped 28 cents at $38.39 per barrel, having climbed by at least 40 percent since February, while United States crude futures slumped 38 cents at $36.41 per barrel.
According to an energy analyst, “Its not very strange to see a wave of profit-taking and some unwinding of long positions, and some people even saying they could reposition for a move toward lower prices.”
“Thats part of a normal cycle that I think can continue this week, we might see $36 or $37 ... Prices are coming down because of speculation Saudi Arabia will not join (the freeze deal) and thats probably what well see over the next three weeks - more speculation and more verbal intervention.”
Crude oil have dipped more than 65 percent since 2014, when booming United States shale oil output and supply from within and outside the Organization of Petroleum Exporting Countries made one of the biggest global surpluses of crude in modern times.
United States production is proving more resilient to low crude prices than many anticipated, despite sharp slashes in drilling for new reserves as well as a surge in bankruptcies.
As stated by a market analyst, “The current rig count implies U.S. production ... would decrease by 705,000 barrels per day year on year on average in 2016, and by 375,000 barrels per day year on year in 2017.”