While accelerating global growth and OPEC's supply cuts have helped crude oil rally since last summer, the prospect of surging U.S. production and slowing growth in the future is weighing on the commodity.
Oil markets climbed on Monday, March 12, on the back of a drop in the number of United States rigs drilling for more production and as the USA economy continued to create jobs, which industry hopes will drive higher fuel demand, NAN reports.
US West Texas Intermediate (WTI) crude futures were at $62.22 a barrel up 18 cents, or 0.3 per cent while Brent crude futures were at $65.70 per barrel, up 21 cents, or 0.3 per cent, from their previous close.
The reduction came as gross short positions on the New York Mercantile Exchange climbed to their highest level in almost a month.
Brent crude is now above $64.70. Both the Brent and WTI saw a massive decline as they enter the market this week with a solid 1% decline.
The EIA is due to publish its latest weekly USA production data on Wednesday.
The crude oil production in the United States rose to over 10 million barrels per day by the end of 2017, according to the International Energy Agency.
For the record, the Islamic republic is allowed to pump up to 3.8 million barrels per day (bpd) under the cutback deal, and Zanganeh said his country could produce about 100,000 bpd more.
Oil prices would have plunged even lower if OPEC and Russian Federation hadn't placed a restraint on production to avoid a glut or oversupply. "We need to see prices in the short-term trade below US$60 to reduce that incentive for USA producers", he said.
"The market continues to flip back and forth on the idea that increased global demand and a production cut is going to support prices. but U.S. production, and North American production levels in general, is going to negate a lot of the impact of that", said Gene McGillian, director of market research at Tradition Energy. Investors' bullish wagers on oil fell last week for the first time in three weeks. The dollar tends to have an inverse relationship with oil prices, as a weaker greenback makes dollar-denominated commodities cheaper for holders of other currencies. The consensus forecast by economists is for inflation of 1.8% in February, thus keeping its level from January.