SINGAPORE: Oil prices dipped in Asia on Monday on profit-taking following last week’s rise and Iran’s move not to join a proposed output freeze by crude producers.
At around 6:20 a.m. local time, US benchmark West Texas Intermediate (WTI) for delivery in April was down 21 cents to $38.29 and Brent crude for May was down four cents at $40.35.
Tehran announced on Sunday that it would join a planned meeting between producer giants only after its output has reached pre-sanction levels of 4.0 million barrels a day.
The March 20 meeting in Russia to discuss an output freeze seems increasingly unlikely if Iran does not participate in the talks, led by OPEC kingpin Saudi Arabia.
Russia and Saudi Arabia mooted the meeting after an increase in global production in January added to a supply glut that sent prices plunging, hitting 13-year lows on February 11 with US crude futures at $26.05 and Brent trading below $30.
But the market has rebounded in recent weeks, with WTI touching a three-month high and Brent breaching the $41 mark Wednesday.
On Friday, the Paris-based International Energy Agency said prices may have “bottomed out” after a 20-month rout.
Phillip Futures analyst Daniel Ang said selling pressure set in Monday as traders took profit following last week’s rally.
“We are seeing a lot of testing at this price,” he told Agence France-Presse.
“Traders are selling at a high level, which explains the prices dipping this morning. But some of it also comes from Iran’s announcement about not cutting back oil production,” he added.
Traders are also watching a meeting of US Federal Reserve policymakers on Tuesday and Wednesday, with attention on whether they will announce another interest rate hike.
A rate increase is a boost to the dollar, which would make dollar-priced oil more expensive, hurting demand and prices. The Fed raised rates for the first time in nearly a decade in December.