Oil prices rose on Monday with traders shifting money into crude futures as the dollar weakened and on concerns that new U.S. sanctions against Iran could be extended to affect crude supplies.
Benchmark Brent crude LCOc1 was down 80 cents at $54.92 a barrel by 11:31 EST (1531 GMT). On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.49% at $52.75 a barrel.
It was last at $52.12 by 10:15AM ET (15:15GMT), down 89 cents, or around 1.7%, after losing 82 cents, or 1.5%, a day earlier. In recent weeks, United States crude inventories rose 2.5 million barrels, while gasoline stockpiles jumped 1.2 million barrels.
"It's a supply-driven setback". Oil fell in NY after the biggest drop in more than two weeks, on estimates that crude stockpiles continued to build up in the US.
Earlier in the week, traders were spooked by a renewed increase in the USA oil rig count.
Gasoline futures fell below the 200 day moving average on a continuous chart, Headrick noted, adding that if they close below that level, it could further pressure crude.
Tehran is exempt from OPEC's plan to cut supplies alongside Russian Federation and other independent producers, which started on January 1 and calls for reductions of nearly 1.8 million barrels per day. Global oil output was cut by 1,4 million bpd last month, said Russian Energy Minister Alexander Novak.
However, the data aggregation and analysis firm also noted that the 10 Opec members obligated to reduce oil output under the landmark agreement, including Saudi Arabia, had achieved 91% of their required cuts in January, with their production falling 1.14 million bpd from October levels. Since November, oil prices have grown by around a fifth due to joint efforts of OPEC and non-OPEC nations to cap the output. "The US will see in the second quarter a significant increase in local supply compared to a year ago".
"U.S. shale is coming back, and it's coming back strong". Last Tuesday, the American government released a report showing that the USA oil output increased for a second month in a row in November. This can either indicate stalling demand or oversupply of the commodity.