Oil trading saw futures receding after a small rally in America as investors wait on the sidelines for signs of real progress on output reduction agreed to by the key oil producing nations.
Brent crude for April fell 15 cents, or 0.3 percent, to $55.43 and light, sweet crude for March shipment lost 10 cents or 0.2 percent, to $52.71 on the Globex session of the Nymex.
The movement came after there was a modest recovery in prices as focus remained on the oil producing countries ensuring that the output reductions are being followed. OPEC has already cut its output by around 1 million barrels per day or 88 percent of the agreed reductions, showing that it is serious about moving forward with its program.
Trading in Asia was relatively light as most of the region celebrates the Lunar New Year. The volume of trade has been restrained in the past two days. Oil prices have been tight at $50 to $55 per barrel for most of the previous months as traders try to analyse OPEC’s output reduction versus the increases being made by the U.S. shale oil industry.
This year’s oil prices have stayed within a limited range with the price of spot Brent moving less than $5 per barrel.
According to financial experts, the current prices are relatively stable but a number of issues could trigger the prices to become more volatile again.
The total net long positions or bets on prices moving in an upward direction are at a record high in Nymex.
Balancing the OPEC cuts somewhat, oil inventories in the U.S. are expected to go up by 2.9 million barrels, on average, over the last week.
The U.S. oil stockpile grew to 5.8 million barrels last week according to the American Petroleum Institute.