Oil fell for a second trading day in a row on Monday, after speculators cut their bullish bets by the most in three months last week and U.S. crude drillers added more rigs for a tenth week running.
Brent crude oil futures fell 53 cents on the day to $47.48 a barrel, by 0830 GMT, while U.S. West Texas Intermediate futures fell 66 cents to $45.22 a barrel.
Traders said the price falls on Monday and Friday were a result of increasing oil drilling activity in the United States, which indicated that producers can operate profitably around current levels.
“The idea that we will continue to bounce off the $50 per barrel handle is proving correct,” said Matt Stanley, fuel broker, Freight Investor Services (FIS) in Dubai, pointing towards “the dynamic of shale oil” as the main reason to have pulled prices back down.
Oil’s near six-percent price decline since Sept. 8 partly reverses a 10-percent rally seen early in the month to around $50 per barrel.
Adding to the pressure on the oil price, the dollar rose against the Australian dollar and most emerging-market currencies, as investors priced in a greater chance of U.S. interest rates rising next week, which forced up bond yields and dented the broader commodities complex.
“From that perspective, we’re getting a bit of a sell-off in oil,” CMC Markets strategist Jasper Lawler said.
“Given the good run that oil has had, that was maybe the easy trade to take when the dollar was rallying,” he added.
When the dollar strengthens, non-U.S. investors tend to cash in on their dollar-denominated assets, such as crude oil.