Forexpros – Crude oil futures erased gains on Monday, retreating from a one-week high as reports that Saudi Arabia increased its oil production to the second highest level since 1980 eased fears over a disruption to global supplies.
On the New York Mercantile Exchange, light sweet crude futures for delivery in May traded at USD107.24 a barrel during European morning trade, dipping 0.32%.
It earlier rose by as much as 0.25% to trade at USD107.99 a barrel, the highest since March 9.
According to statistics the Saudi government submitted to the Joint Organization Data Initiative, the kingdom produced 0.6% more crude in January than in the month before to take its total crude oil output to 9.87 million barrels, the second highest monthly output since at least 1980.
The world’s biggest exporter of crude also boosted shipments to 7.51 million barrels a day in January from 7.36 million barrels in December.
Saudi Arabia is the largest exporter among OPEC members.
The increased Saudi production figures have come in response to lingering fears over a disruption to supplies from Iran.
The leading worldwide financial messaging service for international money transfers said it will stop providing services to Iranian banks subject to European Union sanctions. Iran’s central bank is included in the list.
Iran and Western nations have been locked in a stand-off in recent months over Tehran’s nuclear program.
Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
Iran produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the OPEC, after Saudi Arabia.
Meanwhile, investors paused to reassess the global economic outlook and its implications on world oil demand.
Positive economic data released last week in the U.S. pointed to further evidence of an improving economy, but risks remain outside the U.S.
Zhu Min, deputy managing director of the International Monetary Fund, said on Monday that global economic growth will slow this year, with risks still to the downside as Europe’s financial markets remain fragile.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery slumped 0.45% to trade at 125.25 a barrel, with the spread between the Brent and crude contracts standing at USD18.01.
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