Oil falls, U.S. crude hits lowest since early April

Reuters  |  NEW YORK 

By Ayenat Mersie

NEW YORK (Reuters) - Oil prices slid on Monday, with U.S. crude futures dropping to their lowest since April 10, breaking below technical support levels as investors kept selling on growing U.S. production, possible global supply growth and nagging trade tensions.

Benchmark Brent lost $1.10 a barrel, or 1.4 percent, to $75.69 a barrel by 12:00 p.m. (1600 GMT) U.S. light crude was down 80 cents, or 1.2 percent, at $65.01 a barrel.

"We are breaking key levels of support now," said Phillip Streible, at in "Once we started taking out $65.50 or so, it really started to accelerate. People are not really believing that the rally will continue," he said.

U.S. crude production climbed in March to 10.47 million barrels per day (bpd), a monthly record, data from the showed last week.

U.S. drillers added two in the week to June 1, bringing the total to 861, the most since March 2015, company said on Friday. That was the eighth time drillers have added rigs in the past nine weeks.

"There's been lot of talk about U.S. production continuing to rise. And it feels like once we hit Memorial Day, we hit a seasonal peak" for prices, which "ran up until the start of the summer season, and then hit a summer doldrums," said Streible.

Last week, the week after Memorial Day, the U.S. contract lost about 3 percent after a decline of nearly 5 percent the previous week.

Data from market intelligence firm showed that between May 29 and June 1, crude inventories at Cushing, Oklahoma, rose by 210,046 barrels, a potentially bearish signal, traders who saw the data said.

Prices were also pressured by the expectation that The Organization of the Petroleum Exporting Countries (OPEC) would soon boost output.

"We have about 18 days before we get an official OPEC announcement. And I think the market is just going to watch and wait here," said Brian Larose, at ICAP-TA.

OPEC meets formally on June 22 to set It is expected to agree to raise output to cool the market amid worries over Iranian and Venezuelan supply and after raised concerns that the was going too far, OPEC sources familiar with the discussions told last month.

"The trade tariffs between EU, Mexico, and and the friction with are also weighing on crude oil," said Bill Baruch, of in

British told U.S. over the phone on Monday that U.S. tariffs on EU and aluminum were "unjustified."

Hedge funds and other money managers cut their bullish wagers on U.S. crude futures and options, according to data released on Friday.

(Additional reporting by in London and Naveen Thukral in Singapore; Editing by and David Goodman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, June 04 2018. 21:52 IST