Oil prices were lower on Monday after falling steeply in the previous session, pressured by a potential easing in the production cuts enforced by OPEC in the past year. The production cuts have successfully kept supply tight and sent prices higher, even as the United States has increased its production consistently in recent months. U.S. energy companies added 15 rigs last week, bringing the total count to 859. This is the highest rig count since 2015.
To address potential supply problems, Saudi Arabia and Russia are mulling the possibility of curbing their production cuts which would allow more oil to enter the market, a move which could send prices even lower.
“The pace of the recent rise in oil prices has sparked a debate among investors on whether this poses downside risks to global growth,” Chetan Ahya, Chief Economist at U.S. bank Morgan Stanley wrote over the weekend in a note. Hannah Anderson, global market strategist for J.P. Morgan Asset Management, said that she expects prices to be range-bound around the mid-$60s level, a place she expects will also be comfortable for OPEC.
U.S. WTI futures were down 2.45 percent as of 1:04 p.m. HK/SIN, to $66.22 per barrel. Brent crude futures were down 1.78 percent or $1.36 per barrel to $75.08 per barrel.
Asian Markets Trade Mixed
Asian markets were mixed on Monday following a lower close for Wall Street on Friday. The regional indexes came under pressure as geopolitical tensions mounted between the U.S. and North Korea. Still, by the early afternoon most Asian markets were in the green after struggling earlier in the session. South Korea’s Kospi was up 0.59 percent while the Shanghai Composite gained 0.18 percent. Hong Kong’s Hang Seng Index advanced 0.56 percent. Japan’s Nikkei 225 was relatively flat. Australia’s ASX 200 saw the biggest losses in the early afternoon, trading down 0.62 percent.