Profit taking after a strong rally in prices of crude in April, paired with concern about global oversupply, led futures of the commodity lower on Monday. The bearish sentiment from today's announcement about a nationwide project in Saudi Arabia to stimulate non-oil sectors also outweighed the impact of latest indications on a fall in output in the United States.
Even though producers across the world are seeing funds dry up due to low prices of crude, and the International Energy Agency last week forecast a drop in output of some of the leading countries in the market, the geopolitical rift in the Persian Gulf maintains upward pressure on prices. Iran is aggressively ramping up exploitation and making efforts to return to international markets following the abolishment of international sanctions, while Saudi deputy crown prince Mohammed bin Salman is emerging as the kingdom's sole authority for energy and more.
The two countries have been at odds over regional political influence and tension spilled over to the crude department. The disputes and Bin Salman's hawkish stance in domestic and foreign affairs led the talks between members and non-members of the Organization of the Petroleum Exporting Countries to a dead end on April 17 in Doha. The favourite son of Saudi king Salman today confirmed intentions to list less than 5% of state-owned oil monopoly Aramco in a public offering as part of a wide economic overhaul to develop other segments and reduce reliance on the country's currently dominating export product. Investors saw the plan reducing the prospects for a global agreement on an output freeze.
Inventories in Cushing, Oklahoma, rose 1.55 million barrels in the week through April 22, wires reported today. Meanwhile, authorities controlling Libya's eastern regions have been preparing to resume exports of crude, which is expected to add pressure to already inflated stockpiles abroad.
West Texas Intermediate for delivery in June shed 1.37% to change hands for $43.11 per barrel at ICE Futures Europe. The benchmark contract for Brent lost 0.84%, trading at $44.78 (both 7:33 p.m. CET). The drop wasn't deterred by the dollar's depreciation. The U.S. currency's gauge against a basket of peers shed 0.42% to 94.72 points at 7:44 p.m. CET, as the greenback weakened 0.46% versus the euro and 0.62% compared to the pound. It also fell 0.52% against the yen and 0.41% versus the franc.
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