Brent crude futures weakened in volatile trading on Monday as the market struggled to balance fresh supply pressure against signs of tighter inventories and renewed policy risks around Iran and OPEC.
Brent was down 31 cents at $66.45 a barrel at 1:26 p.m. EST (1826 GMT), after touching a session low of $65.27. U.S. crude futures moved 14 cents higher to $56.60 a barrel, with prices swinging within a $2 range during the session.
Traders said losses narrowed after energy information provider Genscape reported a decline in crude inventories in the latest week. That helped offset broader concern that U.S. stockpiles have been rising for eight straight weeks, with last week’s increase the largest in more than a year.
European Union foreign ministers backed a French decision to sanction Iranian nationals accused of a bomb plot in France, according to three diplomats. The United States has also granted waivers to some of Iran’s oil customers, adding another layer of uncertainty to the market.
The Organization of the Petroleum Exporting Countries is pressing allied producers, including Russia, to join output cuts of 1 million to 1.4 million barrels per day. Russian Energy Minister Alexander Novak said Russia planned to sign a partnership agreement, with details to be discussed at OPEC’s Dec. 6 meeting in Vienna.
Bob Yawger, director of energy futures at Mizuho in New York, said the market would need a united message from producers if any cut is to steady prices. He said the chances of that looked weaker as Dec. 6 approached. Yawger added that the market remains oversupplied in the U.S. and that producers are still trying to manage the imbalance.
Brent remains nearly 25 percent below its early October 2018 peak of $86.74, reflecting worries about slowing global demand and record output from the United States, Russia and Saudi Arabia. OANDA strategist Stephen Innes said last week’s price gains were driven by hopes that OPEC and its partners would act, but that the technical picture still points to a bearish market.
The U.S.-China trade dispute has also made investors more cautious about oil demand growth. Fund managers cut their bullish exposure to crude futures and options to the lowest level since around mid-2017, while weekly exchange data showed money managers holding a combined net long position equivalent to about 364 million barrels of U.S. and Brent crude futures and options, down from more than 800 million barrels two months earlier.
ActivTrades chief analyst Carlo Alberto De Casa said the main trend remains bearish because investors no longer see a real risk of supply tightness in crude.
Additional reporting by Henning Gloystein in Singapore and Amanda Cooper in London.
