Jan. 28 (UPI) — Crude oil prices fell Monday, led lower by fading immediate concerns about Venezuela’s production, and also as the number of rigs in the United States saw a weekly rise, analysts said.
West Texas Intermediate crude oil price futures fell Monday as of 7:15 a.m. EST by 1.6 percent to $52.82 per barrel, while Brent crude oil fell 1.5 percent to $60.70 per barrel as of the same time.
“Crude oil trades lower in response to a fading Venezuelan risk premium. The nation’s main oil terminals have seen limited impact while (Venezuelan President Nicolas) Maduro has abandoned demands that U.S. diplomats should leave the country,” Ole Hansen, the head of commodity strategy at Saxo Bank, told UPI.
“The price decrease appears to be primarily driven by a rise in active drilling wells in the U.S. Drilling wells were up by 10 to 862 as reported by Baker Hughes,” independent analyst Lakshan De Silva separately told UPI.
“Given that U.S. produced a record 11.9 million barrels per day in December, traders would be concerned that shale producers would come back online if prices are to recover too steeply,” he added.
Traders and investors are also following developments related to U.S. and China negotiations, he added.
“Negotiators are working with a March 1, 2019, deadline to reach a deal,” De Silva said. The sentiment surrounding the Chinese economy at the present is negative, De Silva added.
“Despite the marginal decline, WTI prices are up 12 percent for January, the highest monthly increase since 2005, and OPEC production cuts, along with the political crisis in Venezuela, have helped,” De Silva said.
WTI prices had traded at $54.04 per barrel last Monday, which was its highest price for the month, declining to $52.62 per barrel on Wednesday before recovering to close on Friday at $53.69 per barrel.
Prices have been very volatile in recent weeks and are up from a recent low of $42.53 per WTI barrel during the Christmas holiday-shortened week.
WTI prices saw its highest price for 2018 in early October, at $76 per barrel. Prices fell in the third quarter of the year in part due to concern about oversupplies, and about a potential slowdown in economic activity in China, the world’s biggest crude oil importer.