Oil prices eased on Monday, with investors disappointed at major producers' decision to maintain their production cuts at the same level, rather than deepening them.
Brent crude, the global oil benchmark, fell 0.3% to $52.02 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.3% at $49.65 a barrel. Holidays in China, the U.K. and the U.S., mean trading is set to be thin throughout Monday's session.
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Crude futures slumped nearly 5% on Thursday after the production-cut deal led by the Organization of the Petroleum Exporting Countries was extended by nine months but not deepened--a let down for investors who anticipated output cuts would be more severe. The market recovered some losses to finish up nearly 2% Friday.
"For the next week the market's still going to be digesting OPEC's decision to take the easiest option and rollover the cuts for another nine months," said Edward Bell, analyst at Dubai-based Emirates NBD bank. "I think there had been some expectation on the investor side of the market that some sort of positive surprise could have emerged from the meeting but it didn't."
Investment bank RBC said that the production cut extension should result in a price floor slightly above $50 a barrel. The bank remains bullish longer-term on oil. RBC's prediction is for WTI "to move into the mid-to-high-$60/barrel range as global balances tighten" in the second half of 2017.
A potential near-term catalyst for further gains could be U.S. inventory data on Thursday. They will be delayed a day this week because of the Memorial Day holiday. U.S. weekly oil inventories have fallen for over a month, government data shows. That is a good sign for investors looking for indications that the market is rebalancing after years of surplus production.
However, there remains danger that if prices sufficiently rise, financially fragile countries might pull back on their adherence to the production cuts extended at last week's OPEC meeting.
"The question therefore is how long OPEC will be able to maintain its high level of discipline with the production cuts," said Commerzbank in a daily note.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 0.1% to $1.62 a gallon. ICE gasoil changed hands at $463.00 a metric ton, up $1.75 from the previous settlement.
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(END) Dow Jones Newswires
May 29, 2017 06:13 ET (10:13 GMT)