NEW YORK (Reuters) - Oil prices tumbled on Monday, as traders took profits after last week’s surge to an 11-week high, and on a report that OPEC continued to boost crude production despite a persistent glut.
Benchmark Brent crude LCOc1 was down $1.05 or, almost 2 percent at $51.60 by 11:28 am EDT after reaching a session high of $53.31.
U.S. light crude CLc1 was down $1.22 or, about 2.5 percent, at $48.41. On Friday, WTI settled at an 11-week high.
“After an 8 percent rally last week and a move up to the 200 day moving average at $51, crude oil has just gone too far too fast and a pull back today was to be expected,” said Phillip Streible, senior market strategist at Chicago-based RJO Futures.
Last week, the U.S. front-month crude contract breached the 100-day moving average and almost came within a cent of the 200-day moving average on Friday.
Crude prices were pressured on Monday when secondary sources cited in OPEC’s monthly report said the group pumped 31.57 million bpd in September, up 110,000 bpd from August and almost 2 million bpd more than its demand prediction for this year.
OPEC forecast that demand for its oil in 2016 would be much higher than previously thought as its strategy of letting prices fall hits U.S. shale oil supplies. [OPEC/M]
Kuwait Oil Minister Ali al-Omair said there were no calls within OPEC to change the production policy and that lower output from high-cost producers could support prices in 2016, adding to signs OPEC will keep its strategy of defending market share.
Oil has been on a roller-coaster ride over the last few weeks, recovering from six-year lows in turbulent trade. North Sea Brent crude dropped to almost $42 a barrel in August, from a peak above $115 in June 2014, but then rallied back to an intraday high of $54.05 on Friday.
Evidence that oil producers are reducing output in response to low prices has helped make sentiment more positive and many traders and analysts now expect prices to be higher next year as global fuel demand recovers.
Data from oil services company Baker Hughes on Friday showed U.S. energy firms cut oil rigs for a sixth week in a row last week in a sign low prices are keeping drillers away from the well pad.
Additional reporting by Christopher Johnson in London, Scott Disavino in New York and Henning Gloystein in Singapore; Editing by David Gregorio