Oil prices dipped on Monday after enjoying another strong rally last week, with news of a jump in Iraqi exports bringing supply glut fears back to the fore. The commodity has surged for four weeks thanks to a weaker dollar, small indications that the global economy — particularly China — is showing signs of a mild recovery and various disruptions to output including a strike in Kuwait.
However, analysts warned that the gains would be limited owing to still weak demand, the long-running glut and the temporary nature of the disruptions. On Monday, US benchmark West Texas Intermediate (WTI) slipped 42 cents, or 0.91 percent, to $45.50, while Brent sank 55 cents, or 1.16 percent, to $46.82.
WTI rose 5.0 percent and Brent 6.7 percent last week, pushing the month’s gains to around 20 percent for both contracts. It is also well up from the near 13-year lows below $30 seen in February when world markets were in turmoil.
But Iraq — the second largest producer in the OPEC cartel — said it Sunday exported 3.36 million barrels a day last month, according to Bloomberg News, close to the record 3.365 million seen in November.
“Lower output was one of the biggest bullish factors we had back in the first quarter, but as this is something we can’t sustain, the upward momentum in oil prices will slow,” Hong Sung Ki, a commodities analyst at Samsung Futures, said in Seoul.
“If we see more signs of easing production disruptions, this can have a strong downward pressure.”