Oil fell around 1% on Monday as investors continued to unwind bets on higher prices after record cuts last week because of concerns that growing U.S. oil output could hamper an OPEC-led production cut deal.
World markets balked on Monday at the G20's decision to drop a decade-old pledge to resist trade protectionism, with stocks, the dollar, oil and the price of many major sovereign bonds all sliding into the red.
While many are focused on the meteoric rise in the U.S. oil rig count, one must wonder why the Canadian oil rig count plummeted last week. There are headlines that read the increase in the U.S. rig count increased for the ninth time in a row by 14. Yet, in Canada the oil rig count fell by 31 rigs as it appears that Canada is abandoning its quest to capture oil from sand. So that means the increase in U.S. oil rigs will not only have to try to replace OPEC oil, it may have to replace lost Canadian oil production as well.
Crude oil prices are showing a wee bit of green this lovely Saint Patrick’s Day and look like it is on track for its first up week since January! This comes after oil took a hit after a record amount of hedge funds went long before the trade went arseways on us. Yet the bulls may find a pot of gold at the end of the rainbow after OPEC and non-OPEC leprechauns are talking about extending production cuts past the June expiration.
The word “gradual" was all the markets had to hear. The Fed as expected, raised interest rates but signaled rate increases in the future would come at a gradual pace. That assurance was enough to cause the stock market to soar and the dollar to pull back and added momentum to oil that received some friendly data from The Energy Information Administration (EIA). That means that gradually the oil glut should start to disappear.