Oil prices on Monday fell further from 11month highs touched last week, ending a rally that started at endOctober on production cuts and strong Chinese demand, with the markets outlook questioned as coronavirus infections rise.
Brent crude fell 20 cents, or 0.4, to 54.90 a barrel by 0737 GMT, after dropping 2.3 on Friday. U.S. oil was down by 13 cents, or 0.3, at 52.23 a barrel, having declined 2.3 in the previous trading session.
The benchmarks had rallied in recent weeks, buoyed by the start of COVID19 vaccine rollouts and a surprise cut of crude output by the worlds biggest oil exporter, Saudi Arabia. Surging new infections throughout the world, however, have raised doubts about how long demand would hold up.
The Relative Strength Indexes RSIs on both contracts were in overbought territory, indicating a correction was on its way, said Jeffrey Halley, senior market analyst at OANDA.
U.S. drillers added pressure last week by putting more oil and natural gas rigs to work for an eighth consecutive week because rising prices have made production more profitable. Still, the number of operating rigs is less than half of the level of a year ago. RIGU
U.S. drillers have indicated they will continue to keep their spending under control, ANZ Research said in a note. The economics also dont favour a surge in drilling, with half of the industry still uneconomical.
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