Oil prices fell in Asia on Monday as traders took profits, snapping gains last week that saw the biggest two-day rally in six years.
Brent crude futures for October delivery slipped more than $1, or 2 per cent, before recovering although that still put the benchmark on track for its fourth straight monthly decline, having risen in only two of the past 14 months.
“There is definitely a lot of profit-taking going on,” said Daniel Ang, an analyst at Singapore’s Phillip Futures.
“There is some readjustment in the positions taken by traders.”
The fall came after Brent climbed 10 per cent last week, while US crude finished the week up 12 per cent.
Brent was up 69 cents at $49.36 per barrel as of 0632 GMT after rising $2.49, or 5.2 per cent, in the previous session. It fell more than $1 to $48.95 earlier in the session.
U.S. crude for October delivery fell 53 cents to 44.68 per barrel after settling up $2.66, or 6.3 per cent, in the previous session.
Mixed signals by US financial policymakers last week on whether the U.S. Federal Reserve would raise interest rates next month was weighing on sentiment, Ang said.
Some Fed policymakers left the door open to a September interest rate hike at an annual central bankers meeting on Friday in comments that appeared to contradict those by the New York Fed president earlier in the week who said a rate increase seemed “less compelling”.
The comment came after turmoil in global markets in recent weeks following China’s currency devaluation and concerns over its slowing economy.
Investors are eyeing a slew of economic data, including key US nonfarm payroll data, later this week that could give direction on a possible US rate hike when Fed policy makers meet on September 16th-17th.
A rate hike is expected to support the US dollar, making commodities including oil more expensive for users of other currencies.
“We believe that bearishness is still in play,” Phillip Futures said in a note on Monday.
Prices could test technical support at $48.50 a barrel for Brent and $44 a barrel for US crude.
“If prices hold above these levels, there is a chance that prices could move higher this week, which should hinge on optimistic nonfarm payrolls,” Phillip Futures said.
The market is also watching the outcome of planned United Nations-brokered talks later this week between Libya’s warring factions aimed at forming a unity government.
Asian imports of Iranian oil fell 1.3 per cent to just over 1 million barrels a day in July, compared with a year ago, government and tanker-tracking data showed on Monday even as Tehran is expected to ramp up exports following a deal over its nuclear programme.
Reuters
