Baku, April 20, AZERTAC
Oil prices fell on Monday as the U.S. dollar rose, reversing earlier gains after China announced fresh economic stimulus.
Brent crude for delivery in June fell 1.4% to $62.60 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures traded at $55.27 a barrel, down $0.47, or 0.8%, from Friday’s settlement.
Dollar-priced commodities like oil were hit by the rising dollar on Monday. The Wall Street Journal Dollar Index, which tracks the greenback against a basket of other major currencies, rose 0.3%.
Prices had gained earlier after China, the world’s second-largest consumer of oil, announced a surprise one-percentage-point cut in banks’ reserve requirement over the weekend.
“In the second half of the year and going forward, the market should start to rebalance itself as U.S. production slows and demand picks up,” Société Générale said in a note to clients. But the bank also warned that the global oversupply of oil is expected to increase in the current quarter from the first.
While global demand has been improving in recent months with consumers taking advantage of the cheap oil, some analysts don’t see enough strength to balance the market.
With the fundamentals still weak, the latest increase in the crude oil price was largely speculatively driven, said Commerzbank. “Money managers are jumping on the bandwagon and exacerbating the price rises with their purchases,” according to the bank.
Speculative net long positions in U.S. crude rose for the third week running in the week to 14 April. They are at their highest level since the end of July 2014, the bank said.
Nymex reformulated gasoline blendstock for May—the benchmark gasoline contract—fell 1.1% to $1.9099 a gallon, while ICE gasoil for May changed hands at $565.00 a metric ton, down $12.75 from Friday’s settlement.