Oil fell on Monday as investors prepared for an extra 1 million barrels per day (bpd) of oil to hit the markets after OPEC agreed to raise production and as USA equity markets slipped on trade war fears.
U.S. West Texas Intermediate (WTI) crude futures were at $68.41 a barrel, down 0.25 percent, supported more than Brent by a slight drop in U.S. drilling activity and a Canadian supply outage.
"The expectation that we'll see more crude out of OPEC and that supplies in the USA will be tight because of the Syncrude outage... is going to keep the market on edge", said Phil Flynn, analyst at Price Futures Group.
Leaving seasonal supply and demand dynamics aside, it is likely that traders were just too optimistic about OPEC and Russia's meeting last week, possibly expecting Russian Federation to prevail with its proposed 1.5 million bpd increase in total production, although that claim was highly questionable from the start.
When it comes to crude oil prices, politics dwarfs everything else.
The only country that can increase production is Saudi Arabia, so its interpretation of the deal is the 1 that matters.
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"Obviously we've got a market that is stressed from a standpoint of supply", Perry told reporters.
"This is a larger increase than presented Friday although the goal remains to stabilize inventories, not generate a surplus", the USA bank added.
The most dramatic events in the oil market last week occurred in North America as opposed to OPEC's get-together in Europe, according to Goldman Sachs Group Inc.
"The inability of certain OPEC members to raise production will undoubtedly mean the bulk of production increases will be met by the largest producers, though the distribution of increases between members remains unclear". The deal is expected to ease surging global energy prices, though the move has left unanswered questions about how this oil will flow to consumers.
The Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Mr. Muhammad Barkindo, has dismissed suggestions that pressure by the United States President, Mr. Donald Trump, played a role in OPEC's decision to increase oil production. "One simple approach would be to reduce the limits of those not producing enough by 600,000 bpd and increase the limits of members with spare capacity by 600,000 bpd â this would enable 100 percent compliance", said Callum MacPherson, Investec head of commodities.