The great thing about so many conflicting predictions within the analytical community about the crude market is that no matter what happens, a good portion of that community will be proven correct: and so on Monday those who anxious about the impact of rising US shale output were vindicated by a 1.1 percent drop in West Texas Intermediate, the result of speculators cutting bullish bets on oil.
As the rig count fell, "the market is starting to think that U.S. shale oil production may not steadily grow, which is supporting oil prices", Takayuki Nogami, chief economist at state-backed Japan Oil, Gas & Metals National, said by phone from Tokyo.
That has undercut some of the enthusiasm for oil, as investors weigh increased US supply against the likelihood that the Organization of the Petroleum Exporting Countries and non-OPEC producers will maintain supply cuts that have been in effect for more than a year. Some is related to position-squaring ahead of today's USA consumer inflation report, which could also impact the dollar and future demand for crude oil.
West Texas Intermediate, the US benchmark for the price of oil, was down 0.6 percent to $61.67 per barrel. Total volume traded was about 23 percent below the 100-day average.
Brent crude futures were at $64.80 per barrel, down 15 cents, or 0.2 per cent. The contract climbed 3 percent to $65.49 on Friday.
In oil markets, US energy companies last week cut oil rigs for the first time in nearly two months RIG-OL-USA-BHI, with drillers cutting back four rigs, to 796, Baker Hughes (GE.N) energy services firm said on Friday. That followed government data showing the United States added 313 000 jobs in February, the biggest increase since July 2016 and more than the median estimate of 205 000 new positions. "They continue to give market share away to the U.S".
In other news, on Sunday, Iranian oil minister Bijan Zanganeh said OPEC could agree in June to begin easing current production curbs in 2019, the Wall Street Journal reported.
"The longer the deal goes on, it's going to start falling apart", ING commodities strategist Warren Patterson tells Bloomberg.
The pessimistic view was echoed in money managers' short-selling position.