Despite signs of continued tightness in supply, oil prices dropped early on Monday on some profit taking and a Russian minister suggesting that Russia and OPEC could abandon the production cut deal.
At 10:09 a.m. EDT on Monday, WTI Crude was down 0.77 percent at $63.40 and Brent Crude was trading down 0.61 percent at $71.11.
Last week was the sixth straight week of gains amid tightening supplies due to OPEC and Russia's production cuts, the collapse of Venezuelan production, and fighting in Libya which could disrupt the African nation's oil industry again.
Libya's oil production is still under threat from renewed fighting between warring armed groups, and the situation could become as bad as it was during the 2011 civil war, the National Oil Corporation's chairman, Mustafa Sanalla, told the Financial Times in an interview last week.
At the start of this week, supply continues to be the focus of the market, but oil futures were "marginally lower early Monday in Asia despite the region's stock markets opening stronger as some profit-taking set in, with prices closing just under fresh five-month highs last week," Vanda Insights said.
While tighter supply caps oil price declines, during the weekend, Russia's Finance Minister Anton Siluanov gave traders food for thought after he was quoted as saying by the Russian TASS news agency that OPEC and Russia could decide to abandon the deal to fight for market share, but this could send oil prices tumbling to $40 a barrel. There isn't any decision yet, Siluanov said, noting that he doesn't know if OPEC could be on board with ditching the deal.
Saudi Arabia, OPEC's largest producer and de facto leader, has been signaling that it would do whatever it takes to rebalance the market (and support oil prices), and followed through its commitment to cut much deeper than pledged in the pact, as OPEC's March production dipped to a four-year low.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More