Futures slid as much as 1.9 percent on Monday in New York. U.S. stocks declined as China imposed retaliatory tariffs on U.S. goods, the latest move in an escalating trade dispute between the world’s largest economies. At the same time, supply concerns that prompted hedge funds to increase bullish bets on the benchmark U.S. crude contract have fizzled.
“The broader markets are struggling,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. In addition, the oil market “is super long at the moment, so without a catalyst it will be hard for that length to stick around.”
Oil also fell as trading volume lagged normal levels by about 25 percent in the first trading session after the Easter holiday weekend. West Texas Intermediate crude has started April on shaky ground following March’s 5.4 percent gain. OPEC’s efforts to curb output have been undercut by surging U.S. production. A Kuwaiti oil undersecretary told the state-run news agency he doesn’t expect crude to dip below $55 a barrel.
WTI for May delivery dropped 80 cents to $64.14 a barrel at 9:52 a.m. on the New York Mercantile Exchange after earlier rising as much as 0.7 percent. No futures were traded in New York or London on Friday due to the Good Friday holiday. Brent for June settlement fell 62 cents to $68.72 on the London-based ICE Futures Europe exchange. The global benchmark traded at a $4.61 premium to June WTI.
In the U.S., the oil rig count declined by the most since November last week, Baker Hughes data showed. Still, nationwide crude production has remained above 10 million barrels a day since early February. “Expect choppy trading in a thin market coming out of the long holiday weekend,” said Michael Tran, a commodities strategist with RBC Capital Markets in New York.
Oil-market news: Gasoline for May delivery fell 1.2 percent to $1.9934 a gallon. Money managers increased their bullish ICE Brent crude oil bets by 48,566 net-long positions to 615,660, the highest on record, weekly ICE Futures Europe data on futures and options show. Russia is committed to ensuring a re-balancing of the global oil market, Energy Minister Alexander Novak said Monday in a statement. Bloomberg
