Investing.com – WTI crude oil prices settled lower on profit taking and renewed focus on growing U.S. output amid a rise in domestic oil rigs but losses were limited as traders anticipated a disruption in Middle East oil supplies amid ongoing tensions in the region.
On the New York Mercantile Exchange crude futures for May delivery fell 0.33 cents to settle at $65.55 a barrel, while on London's Intercontinental Exchange, Brent fell 34 cents to trade at $69.47 a barrel.
Crude prices pared some losses heading into settlement as traders continued to bet that rising geopolitical Middle East tensions could lead to a disruption in supplies, offsetting the continued ramp up in U.S. oil output.
Saudi air defences reportedly shot down seven ballistic missiles fired by Yemen's Iran-aligned Houthi militia on Sunday, some of which targeted Saudi capital Riyadh, Reuters reported.
Also adding to geopolitical tensions were growing expectations that the U.S. could walk away from the Iran nuclear deal following president Donald Trump’s decision to promote John Bolton to National Security Advisor, given the latter’s hawkish views on critical issues like the Iranian nuclear deal.
The ongoing uptick in U.S. oil output, meanwhile, remained front and centre after the number of oil rigs operating in the US rose by four to 804, the highest level since March 27, 2015, according to data Friday from energy services firm Baker Hughes.
Some market participants suggested crude prices could come under near-term pressure as the slowdown in refinery activity – which tends to lower demand for crude – will keep crude prices “flattish,” in the short-term as crude inventory draws will decline.
“Refinery maintenance is likely to continue through early March and summer demand is not likely to pick up until mid-April,” said National Alliance.” “This is expected to greatly reduce inventory draws over the next few weeks and might keep oil flattish short-term.”
The bank, however, remained confident on the longer-term outlook for WTI, estimating crude could potentially hit $70 a barrel by the second half of year as “geopolitical tensions and accelerating inventory draws are likely to send oil higher as summer gets underway.”
Commodity Futures Trading Commission (CFTC) data Friday, meanwhile, confirmed the turn in sentiment on oil prices as traders resumed their bullish bets after trimming long positions for two-straight weeks.
Hedge funds and other money managers raised their net long U.S. crude futures and options raised in New York and London by 34,575 contracts to 488,438 during in the week to March 20.