Crude Prices plunged by 2 per cent on Monday, May 2, as data showing higher Middle East oil production and record hedge fund buying sparked profit-taking on April’s outsize rally.
Traders also cited a stockpile surge of 821,969 barrels at the Cushing, Oklahoma delivery point for US crude during the week to April 29, raising concerns again that inventories at the storage hub could be building to near capacity as producers raise output.
Oil markets rose 20 per cent or more in April, with Brent having its largest monthly gain in seven years. Speculator bets on higher Brent crude prices hit record highs last week, while bullish bets on US crude futures and options rose to 10-month highs, feeding investor views prices may have risen too far, too fast.
“We would not be surprised to see the rally pause for breath soon and feel that the risks currently lie more to the downside,” London-based Capital Economics said in a note.
Brent LCOc1 was down $1.05 at $46.32 per barrel by 10:15 a.m. EDT (1415 GMT).
US crude’s West Texas Intermediate futures CLc1 were 80 cents lower at $45.12.
On Friday, the June Brent contract expired at $48.13 a barrel, a 21.5 per cent gain over the month that marked the largest monthly advance since May 2009. Earlier in that session, it reached a six-month high of $48.50.
Crude production by the Organization of Petroleum Exporting Countries climbed in April to 32.64 million barrels per day, close to the highest level in recent history, a Reuters survey showed.
Iraq’s April exports from southern fields increased, as did seaborne exports from Russia, the biggest exporter outside OPEC.