Oil prices fell on Monday’s trading session, as US oil output surged. The physical market weakened and the dollar strengthened, which added to the pressure from a decline in equity and commodity markets.
Brent crude futures dropped by 1.6%, trading at $67.46 a barrel, with US WTI crude falling 2.3%, below $63.92.
Last month’s US jobs report showed the fastest wage growth in almost 9 years, which has exacerbated a broader market sell-off as European shares fell from record highs and commodity prices got hit by the dollar’s growth.
The three major Wall Street indexes posted their biggest weekly losses in two years on Friday, after a strong job report. The S&P 500 and the Dow Jones industrial average posted their worst week since January 2016, while Nasdaq recorded its lowest week since February 2016.
The Dow Jones Industrial Average fell by 1.4% in Monday’s mid-session, raising concerns about lower oil prices.
According to analysts, although oil volatility is on the rise, it is still near its lowest level in three years. Crude oil prices have dropped in the last few weeks, with the price of North Sea oil reaching its lowest level in eight months, while Russian Oral crude recorded its lowest level in one year, last week.
At the same time, maintenance and switchover in refineries could affect demand for oil. Motiva Enterprises LLC, the largest oil refinery in the United States, began monthly repairs on Monday at its main crude processing unit, its 603,000 bpd facility in Port Arthur, Texas. Oil, recently reaching its highest level in nearly three years, has been under pressure over rising US oil production, which could threaten OPEC efforts to boost prices.
Saudi Arabia announced during last week that it had cut official sales prices for European customers. US government data for last week showed that production rose to more than 10 million barrels a day in November, for the first time since 1970. US energy companies added oil platforms for the second week in a row last week.
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