Crude oil prices appeared headed lower for a third session early Monday in what analysts suggested could be a sentiment-driven pause before new gains considering tightness in the market related to OPEC cutting production at least into June.
West Texas Intermediate crude future prices fell as of 8:20 a.m. EST just 0.2 percent to $58.90 per barrel, while Brent crude retrenched deeper, 0.5 percent, to $66.45 per barrel as of the same time, according to UPI.
“A recovery in United States stocks would probably reduce some of the pressure given how sentiment driven the market suddenly has become instead of just focusing on the supportive production cuts,” Ole Hansen, head of commodity strategy at Saxo Bank, told UPI.
Year-to-date highs were reached on Wednesday when WTI prices closed at $60.23. Brent is similarly down for a third day after closing at its highest year-to-date level of $68.27 Wednesday.
“While OPEC together with Russia can control output, they have no influence on demand and as the price of oil goes up, so does the tax burden on everyone else,” Hansen added.
Other traders have expressed concerns about a potential economic slowdown ahead that could slash crude demand.
There could be “a certain reluctance from macroeconomic funds to go all in when the recessionary clouds on the economic horizon seems to be getting darker,” he said.
On Oct. 3, WTI prices reached the peak for last year at over $76 per barrel while Brent also hit a peak level at $86 per barrel, however prices then plunged in the following weeks.
Crude oil is seen potentially increasing in the second quarter, “but for now we adopt a short-term bearish stance in the belief that $60 (WTI) and $70 (Brent) will present a temporary line in the sand,” Hansen had said last week in a report.
Any progress in the U.S.-China trade negotiations could help market sentiment, analysts have said.