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Oil prices turned lower on Monday morning ET in a relatively calm and steady thin trade due to the Easter holiday.
Oil booked a major 7% gain last week, which was a day shorter due to Good Friday.
The jump in prices last week followed the surprise announcement of several major OPEC+ producers that they would voluntarily cut total crude oil production by 1.66 million barrels per day (bpd) by the end of the year. The reduction in output includes Russia extending its current 500,000-bpd cut through December.
The cuts lifted oil prices by around $5 per barrel, bringing Brent to the $85 handle and WTI to above $80 per barrel again.
Earlier today in Asian trade, crude oil prices started the week steady.
Currently, according to Bloomberg, traders are busy assessing the impact of the announcement on global oil supply. These may become a bit clearer later this week when OPEC and the International Energy Agency (IEA) release their new monthly oil market reports.
The March CPI report from the United States is due out on Wednesday and if it shows higher inflation still, it could lower prices despite the growing supply concerns. A poll by Reuters has suggested this won’t be the case and inflation cooled off to 5.2% in March from 6% in February.
Money managers responded to the cuts from OPEC+ by raising their net long position – the difference between bullish and bearish bets – on WTI Crude by 63,000 lots to 174,600 lots, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday, commenting on the latest commitment of traders report. Most of the long position was driven by a collapse in the gross short position to a ten-week low of 35,000 lots. Data on Brent is not yet available due to the Easter holiday, Hansen added.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com