Crude oil prices dipped in early Asian trading on Monday as rising OPEC output and an expectation that the group would keep production high added to sentiment that the market remained over supplied despite ongoing falls in U.S. rig operations.
Crude oil prices jumped almost 5 percent on Friday, their biggest rally in over a month, as a bigger than expected drop in U.S. oil rigs in operation set off a renewed rush of bullish bets.
Yet prices dipped on Monday as the market continued to be over supplied due to near record production in most oil-producing regions, including the Middle East, Russia and North America.
“Reports of the U.S. Oil Fund, the largest exchange traded fund in the U.S., withdrawing almost $1 billion in April and May, suggests recent gains could come under pressure from bearish sentiment regarding oversupply,” ANZ bank said on Monday.
Oil output by the Organization of the Petroleum Exporting Countries (OPEC) likely hit a two-and-a-half year high of 31.22 million barrels per day (bpd) in May and production is not expected to be cut during a meeting of the group this Friday.