Oil prices gave up earlier gains to turn 1% lower on Monday amid profit-taking following last week’s rally.
As of 7:13 a.m. ET, the U.S. benchmark, WTI Crude, traded 0.81% lower at $60.98. The international benchmark, Brent Crude, was down by 0.83% on the day at $65.41.
Oil rallied by nearly 8% last week after the Trump Administration imposed sanctions on Russia’s two biggest oil producers and refiners, Rosneft and Lukoil, “as a result of Russia’s lack of serious commitment to a peace process to end the war in Ukraine.”
The sanctions spurred a rally on Thursday as traders rushed to cover short positions amid concerns that supply from Russia could be disrupted.
As the market began to digest the implications of the sanctions, slated to come into effect on November 21, the prices eased and the looming market oversupply capped gains.
Oil firmed in Asian trading on Monday, amid signals from the United States and China that progress was made in the trade talks this weekend.
The partial thaw in tensions gave markets a boost, signaling a potential recovery in global demand sentiment after months of uncertainty.
However, oil gave up earlier gains and fell in the European trading on the back of profit-taking and persistent expectations of oversupply in the near term, or at least until the sanctions situation around Russian supply becomes clearer.
Growing production from the Americans will moderate oil prices in the coming days and weeks, Fatih Birol, the Executive Director of the International Energy Agency (IEA), told Bloomberg Television on Monday, adding that he doesn’t expect a major shake-up on the market in the near term.
Also on Bloomberg Television, Dave Ernsberger, President of S&P Global Commodities Insights, said that the oil market continues to deal with a “pretty significant” overhang issue. S&P Global still expects oil prices would fall below $60 a barrel after the turn of the year, Ernsberger told Bloomberg.
By Tsvetana Paraskova for Oilprice.com
