LONDON: Brent crude slipped to around $65 on Monday as the dollar strengthened, but a further sign that US shale output may have started to decline put a floor under prices.
The dollar rose 0.3 per cent against a basket of currencies, making dollar-traded commodities such as crude oil more expensive for holders of other currencies.
“The recent US dollar strength weighed on market sentiment and prompted investors to lock in recent gains,” said Myrto Sokou, senior analyst at London-based Sucden Financial.
Brent fell 20 cents to $65.08 a barrel by 1145 GMT, having touched $65.61 earlier in the session.
US crude, called WTI, was down 4 cents at $57.11 a barrel, after touching $57.46.
The number of active US rigs drilling for oil has fallen for a record 20 weeks in a row to the lowest since 2010, according to data from oil services firm Baker Hughes, fuelling expectations of a drop in US production.
Fighting in Yemen raged on as Saudi Arabia continued its air strikes against Houthi militia forces in Aden.
While Yemen itself is not among the biggest oil producers in the region, Gulf producers ship oil along the Gulf of Aden on Yemen’s southern coast and through the narrow straits of Bab el-Mandeb, between Yemen and Djibouti.
Analysts at Bank of America Merril Lynch raised their oil forecast for Brent and WTI.
“The market seems to have found a spot price low, and we lift our end of 2Q15 targets for WTI and Brent to $59 and $63 a barrel,” they said in a note on Monday.
“We revise up our 2016 Brent forecasts to $62 from $58, but remain bearish relative to the forward due to the big oil overhang.” Prince Abdulaziz Bin Salman Bin Abdulaziz, the deputy oil minister of Saudi Arabia, said on Monday that the kingdom’s high oil production policy was based on the status of global demand.
Speaking to reporters in Saudi Arabia, the world’s top oil exporter, he said the market was “excellent” and that Riyadh was keen to maintain its market share.
Hedge funds and other money managers raised their bets on rising Brent crude oil prices LCOc1 for a fifth week in a row to a new record, exchange data showed on Monday.
