Oil prices end 4-week rally

Oil prices were driven lower on Monday on comments made by Iran’s oil minister over the weekend that suggested Iran may not participate in a production freeze that was agreed on by Saudi Arabia, Russia and other big oil producers recently in Doha.

Oil prices have rallied sharply over the past few weeks from the lows of the year as the potential production freeze helped ease anxiety about over-supplied global markets.

But concerns about the supply glut on the market came back to the fore this week and US oil prices came under heavy selling pressure on Monday to trim four-straight weekly gains. Oil prices have surged by around 40 per cent in just a few weeks.

Prices have moved ahead too far, too fast over the past few weeks and so a pullback is expected, especially since economic data have not made a strong enough case to support prices at current levels. Focus is especially on China, a large consumer of oil and commodities in general. On the one hand, many economy data points on the broad economy have come in weaker than forecast.

US oil prices fell over 3 percent on Monday and closed down 3.43 percent at $37.18 a barrel (loss of $1.32). It hit a three-month high of $39.02 on Friday.

Meanwhile, Brent crude, the global crude oil benchmark, closed down 73 cents, at $39.66 barrel.

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