Oil prices up slightly despite strong US dollar, concerns price rally out of steam

oil prices
Oil prices rose slightly in seesaw trading on Monday. Anadarko photo.

Oil prices rose slightly in seesaw trading on Monday. Anadarko photo.

Oil prices impacted by restart of production from As-Sarah fields in Libya

Oil prices seesawed in trading on Monday as the US dollar pared losses and investors grew more concerned that the recent rally in prices has run out of steam.

By 2:29 p.m. EST, Brent crude was up 22 cents to $68.83/barrel, after earlier hitting $69.51 per barrel.  On Jan. 15, Brent climbed to its highest value since December 2014, rising to $70.37.  US WTI rose 9 cents to $63.40/barrel.

The Canadian Crude Index fell to $37.59.

According to Reuters, speculators are currently holding record net-long positions on the market, and bullish bets are outweighing bearish ones.

“At these levels, the market requires a steady drumbeat of positive information, and without that, its hard to attract new longs to the market,” said Gene McGillian, director of market research at Tradition Energy.

With a US government shutdown poised to come to an end, the dollar index pared losses after hitting a near three-year low.

In Libya, production has resumed at the country’s As-Sarah fields on Sunday.  This has also impacted oil prices with production expected to hit 55,000 barrels per day (b/d) by Monday.

Most Libyan crude is priced against Brent, so the changes in output from Libya will have an effect on the benchmark.

“The downside might be limited but last week’s highs are unlikely to be penetrated unless there is a significant bullish change on the supply front,” Reuters reports PVM analyst Tamas Varga said in a report.

Supporting oil prices on Monday were comments made by Saudi Arabia’s oil minister Khalid al-Falih over the weekend.  The oil industry heavyweight said producers would likely continue to cooperate on crude output reductions into 2019.

Falih did concede that rebalancing of the oil market has taken longer than originally predicted, but said that global demand is helping drive down inventories worldwide.

“Global growth has become synchronized and accelerated above trend,” U.S. bank Morgan Stanley said in a note, according to Reuters.

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