The crude oil prices went down on Monday as the steady rise in US drilling activity is a signal for a forthcoming extra increase in black gold production. At the same time, Europe and Asia are opposed to the possibility for the US to introduce sanctions against one of the major oil exporters – Iran.
Last week, oil prices peaked at a three-year high due to market expectations that oil exports from Iran to shrink considerably after the sanctions which the US plans to introduce later in the year.
Early in the week, the US crude oil with delivery in June fell by 0.30% to 70.49 USD per barrel. The decrease in the Brent variety is 0.44% to 76.78 USD per barrel.
About a million barrels of oil are likely to disappear from the global market if US sanctions against Iran come into force. However, it is still unclear how the market will be affected, as Germany has already said it will protect its companies from US sanctions. At the same time, it seems that China will fill the gap created by the United States with the purchase of oil.
Significant influence on oil markets is also the increasing drilling activity in the United States. The number of working drilling platforms has risen by 10 to 844 for the week to May 11, and this is the highest level since March 2015.
Hedge funds cut their bullish sentiment on US crude oil, indicating that no further price increases are expected.
In the commodity markets, the price of gold remained unchanged at 1,320.70 USD per ounce. The silver fell by 0.10% and copper and platinum grew by 0.39% and 0.29% respectively.
The dollar index, which measures the strength of US dollars against a basket of six major currencies, declines by a minimum of 0.04% to 92.50 points.