Oil prices recorded their first net loss over a week in five weeks as markets wound up last Friday. Brent crude lost around 2% over the course of the week to finish the day at $55.81 a barrel while WTI fell 1% in total to $53.40. Both benchmarks recorded small gains for the day, Brent up 16 cents and WTI 4 cents.
Losses last week came as a result of U.S. crude oil inventories rising to record levels after two weeks of stockpiles rising significantly ahead of forecasts. While it is normal for inventories to show builds at this time of year, a combination high imports locked in earlier in expectation of higher prices, increasing domestic production and soft demand has magnified the usual impact of seasonality.
Monday morning has seen both Brent and WTI record some gains over the course of trading during the Asian session. The former had gained 23 cents to $56.04 a barrel as markets in London prepared to get underway and WTI 19 cents to $53.59. Trading volumes will be lower than usual today with U.S. markets closed for Presidents’ Day.
The latest Goldman Sachs research on U.S. production indicates that the current rig count implies a 130,000 bpd year-on-year increase for 2017. While OPEC members and partners have committed to reducing their own production by 1.8 million barrels a day, which should more than outweigh the increase from the U.S., the rise will impact the pace at which inventories will shrink.
This week U.S. crude and gasoline inventories data from last week will be released on Thursday, rather than Wednesday, as a result of today’s national holiday. Oil trade data for January will also be released by China on Wednesday.
Meanwhile, gold prices showed minor losses this morning with spot gold down 0.1% to $1233.61 oz. and futures have had a significantly bigger 0.4% fall to $1234.81 oz. Trading is expected to be shallow today with U.S. markets out of the picture. Market participants are also waiting on comments by several Fed officials due to speak later this week. Clues as to whether the next 0.25% rate hike might come as early as next month, or whether May or June are more likely, is of most interest.