USA crude traded 85 cents lower at $31.34 a barrel.
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Prices ended on a buoyant note Friday, with the USA benchmark West Texas Intermediate (WTI) for March delivery soaring 9% to $32.19 a barrel (nearly Rs 2,177.33) while Brent soared 10% to $32.18 a barrel (nearly Rs 2,176.66).
Oil prices fell 3 per cent on Monday as Iraq announced record-high oil production feeding into a heavily oversupplied market, wiping out much of the gains made in one of the biggest-ever daily rallies last week.
The advance of a blizzard toward the US East Coast over the weekend sent crude futures up 15 per cent over two days last week. Elsewhere, the oil ministry in Iraq declared that oil output registered a high in December and its oil fields in the southern and central regions pumped out 4.13 million barrels a day, sources confirmed.
A senior Iraqi oil official said the country might raise output even further this year.
“A notable United States dollars retracement, similar to last spring, remains one of few potential near term catalysts for oil prices… The other factor would come from still having the market being in a bearish situation where the market is oversupplied”, said Daniel Ang, an investment analyst at Phillip Futures.
Prime Minister Datuk Seri Najib Tun Razak wrote in najibrazak.com that Malaysia was not spared from current economic challenges amid lower crude oil prices, which would have an impact on the country’s income.
On Monday, the head of OPEC repeated that he wants oil producers outside the Organization of the Petroleum Exporting Countries to assist in reducing the global oversupply.
“It is vital the market addresses the issue of the stock overhang”, Secretary General Abdullah el-Badri told a conference in London.
Reuters market analyst for commodities and energy technicals Wang Tao said on Monday that Brent oil faces resistance at $32.72 per barrel, and may hover below this level for one day or retrace to support at $30.98, before rising again.
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In Riyadh, Saudi Aramco’s Chairman Khalid al-Falih strongly defended the company’s plans for a possible IPO move and said these plans are not due to a need for cash in the midst of a global oil price slump.
