Oil prices dipped in Monday trading as investors took profits from last weeks gains, however, concerns over tensions involving Saudi Arabia and Iran supported the oil market.  Anadarko photo.

Brent oil prices gained 6.4 per cent last week

Oil prices fell slightly on Monday on profit taking by investors after last week’s impressive gains, however, tensions between oil producing powerhouses Saudi Arabia and Iran helped support the oil market.

By 12:29 p.m. EDT, Brent crude had fallen 25 cents to $69.56/barrel and US WTI dipped 37 cents to $65.51/barrel.  The Canadian Crude Index was down 12 cents to $44.51.

In trading last week, Brent gained 6.4 per cent and West Texas Intermediate was up by 5.7 per cent, the strongest weekly gains since last July.

“I don’t see anything extraordinarily bearish in the market today. I think some folks here are just…happy to take profits,” Bob Yawger, director of energy futures at Mizuho told Reuters.

According to Yawger, despite the decline in oil prices Monday, most share prices for energy companies and refiners in particular, rose Monday.  The S&P Energy Index climbed 0.4 per cent.

With the United States and China beginning trade talks, global stocks rose from six-week lows as fears of a trade war between the two countries were eased.  Reuters reports analysts were concerned that a trade war could hurt oil demand.

Last week, US President Donald Trump signed a memorandum that could impose tariffs of up to $60 billion on Chinese exports to the US.

A rising rig count in the US also pressured oil prices on Monday.  Last Friday, Baker Hughes reported the number of US rigs rose to a three-year high of 804.  US crude production has already jumped by a quarter since mid-2016 to a record high 10.4 million barrels per day (b/d).

By the end of the year, the US Energy Information Administration predicts US output will top 11 million b/d, matching Russia’s production.

“With US crude production likely to be close to 10.5 million b/d by now and NGL (natural gas liquids) output also increasing strongly, there is a clear chance that year-on-year supply growth in the US could at least temporarily hit 2 million b/d over the summer months,” Reuters reports JBC analysts wrote.

Despite concerns over growing US output, the oil market was supported by rising tensions in the Middle East.

On Sunday, Saudi air defenses shot down ballistic missiles fired by Yemen’s Iran-aligned Houthi militia.  Some of the missiles were targeted at the Saudi capital city of Riyadh.

US Commodity Futures Trading Commission said on Friday that hedge funds and other money managers raised their net long US crude futures and options positions for the week ending March 20, reversing the two-week trend of cutting bullish bets.