Oil slides; focus turns from Canada fire to U.S. stockpiles
By Barani Krishnan
NEW YORK (Reuters) - Oil prices tumbled on Monday on expectations that U.S. crude inventories would again build to record highs, taking the market's focus off swooning Canadian oil output due to raging wildfires.
Brent settled almost 4 percent lower, with U.S. crude down almost 3 percent. In early trading, oil rallied more than 2 percent as investors considered the loss of half, or more than 1 million barrels per day (bpd), of Canadian oilsands supply. Canada exports almost all its crude from oilsands to the United States.
But analysts noted that speculators already hold the largest number of long positions since last summer in U.S. crude's West Texas Intermediate futures CLc1 and near-record bullish bets on Brent LCOc1, and said the scope for further gains was limited. [CFTC/] [O/ICE]
"Positioning has been already very stretched in the oil market," Barclays Capital commodities strategist Miswin Mahesh said.
WTI's front-month contract, June CLc1, settled down $1.22, or 2.8 percent, at $43.44 a barrel. It had rallied as much as $1.28 in Asia.
Brent's front-month, July LCOc1, tumbled by $1.74, or 3.8 percent, to settle at $43.63. It had risen as high as $46.48.
July WTI CLN6 hit its highest premium in more than three months to July Brent LCN6 due the relatively superior performance of U.S. crude since the wildfire. The U.S. market typically trades at a discount to the European benchmark CL-LCO1=R.
Some analysts said the Canadian outages could still support prices as officials said resuming operations would be a challenge, with no timeline set. Continued...