Oil eased toward $66 a barrel on Monday after reaching a 2015 high, as ample current supplies and weak Chinese factory activity countered expectations of a tighter supply and demand balance later this year.
The collapse of oil prices in 2014 has prompted expectations that supply growth in higher-cost crude producers such as the United States will slow. On Friday, oil services firm Baker Hughes Inc. said the number of U.S. active rigs had fallen for a record 21 weeks in a row.
Brent crude LCOc1 slipped 15 cents to $66.31 a barrel by 09:31 a.m. EDT, after hitting a 2015 peak of $67.10. U.S. crude CLc1 lost 23 cents to $58.92. The U.S. benchmark hit its highest this year at $59.90 on May 1.
“The market is expecting the tightening in the second half of the year,” said Eugen Weinberg, analyst at Commerzbank.
“We argue this dynamic is hardly fundamentally sound,” he said of the market’s rally. “There has yet to be any noticeable drop in U.S. oil production.”
A public holiday in Britain on Monday limited trading volume.