Crude oil prices drop as market-wide sentiment sours

Getty Images file photo

Beijing, China (BBN) – Crude prices held stronger in Asia on Monday in a relief rally after the French election went widely as expected, pitting centrist Emmanuel Macron and far-right leader Marine Le Pen in a May 7 runoff and attention turned to the Korean peninsula and tensions that sparked calls between President Donald Trump and the leaders of Japan and China, reports
Key challengers in the race threw support behind Macron for the runoff, with markets widely expecting him to win.
U.S. West Texas Intermediate crude June contract rose 0.48% to $49.86 a barrel. Elsewhere, on the ICE Futures Exchange in London, Brent oil for June delivery gained 0.55% to $52.73 a barrel.
Elsewhere, Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping held separate calls on Monday with Donald Trump over North Korea.
Abe told reporters after a telephone call with Trump that he appreciated the U.S. leader’s stance of showing that all options are on the table when it comes to dealing with North Korea.
Xi told Trump that he hopes all sides exercise restraint over the issue of North Korea and that China opposes anything that runs counter to U.N. Security Council resolutions, state media said on Monday.
Last week, oil futures settled lower for the fifth session in a row on Friday, extending losses to the weakest level in around three weeks as signs of further gains in U.S. crude output pressured prices.
U.S. drillers last week added rigs for the 14th week in a row, data from energy services company Baker Hughes showed on Friday, extending a 10-month drilling recovery.
That brought the total count to 688, the most since September 2015, underlining concern that an ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.
In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels.
A final decision on whether or not to extend the deal beyond June will be taken by the oil cartel on May 25.
In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.
Meanwhile, traders will also continue to pay close attention to comments from global oil producers for further evidence that they are complying with their agreement to reduce output this year.