Oil prices dipped in early Asian trade on Monday as rising production in the Middle East outweighed falling US output and the recent slide in the dollar, which has been supporting crude.
Brent futures were trading at $47.05 per barrel at 0028 GMT on Monday, down 32 cents from their last settlement. US crude was down 28 cents at $45.64 a barrel.
Analysts said rising output from the Organization of the Petroleum Exporting Countries (OPEC) and especially the Middle East was outweighing supportive factors such as an ongoing, albeit slow, fall in US output and a sliding dollar, which makes it cheaper for countries using other currencies to import dollar-traded fuel.
“The weaker dollar failed to excite investors in the crude oil markets,” ANZ bank said, citing a rise in OPEC-output as the main downward driver for prices.
The dollar has fallen over 6 percent this year against a basket of other leading currencies.
French bank BNP Paribas said that a recent oil rally, with prices jumping almost a third since April, was largely driven by sentiment and lacked physical fundamentals.
“The recent rally in oil prices … appears to have little to do with fundamentals,” it said.
“We see the recent rally as sowing the seeds of its own demise, and extending our recommendation to protect against short-term downside risk.”
OPEC-supplies rose to 32.64 million barrels per day (bpd) in April, from 32.47 million bpd in March, according to a Reuters survey based on shipping data and information from sources at oil companies, OPEC and consultants.
That almost matches January’s 32.65 million bpd, when Indonesia’s return to OPEC boosted production to records.
Despite Monday’s lower prices, other analysts are growing confident that a near-two-year rout in oil has ended, and many have raised their price forecasts.
The chief of the International Energy Agency (IEA) said oil prices may have bottomed out, providing the health of the global economy does not pose a concern.
“In a normal economic environment, we will see the price direction is rather upwards than downwards,” IEA Executive Director Fatih Birol said on Sunday.
Non-OPEC output is set to fall by more than 700,000 bpd this year, the biggest decline in around 20 years, he said.
With global oil demand seen growing by 1.2 million bpd this year, the draw in global stockpiles will start soon, helping push up prices, he said.