Investing.com -- Crude futures retreated from 2016-yearly highs reached late last week, amid heavy profit taking on Monday, as investors continued to digest the latest production increases from OPEC which pushed supply level from the world's largest oil cartel to near all-time record highs.
On the New York Mercantile Exchange, WTI crude for June delivery traded in a broad range between $44.55 and $46.13 a barrel, before settling at $44.74, down 1.19 or 2.59% on the session. Last Friday, U.S. crude futures surged to an intraday high of $46.78, its highest level since early-November. Since plunging to 13-year lows on Feb. 11, WTI crude has surged more than 55%.
On the Intercontinental Exchange (ICE), brent crude for July delivery wavered between $45.73 and $47.37 a barrel, before closing at $45.81, down 1.56 or 3.29% on the session. Last week, North Sea brent futures cleared $48 a barrel for the first time since November 9. Brent futures are also up by approximately 50% since briefly dipping below $30 a barrel in mid-February.
Energy traders continued to react to reports from Reuters on Friday, which showed that OPEC increased production by 170,000 barrels per day in April from 32.47 million to 32.64 million bpd, according to shipping data and oil company sources. It came as shipments from Russia increased on the month and exports from Iraq's southern Basra region neared record-highs.
Oil prices also received some upside support by bullish comments from International Energy Agency (IEA) head Faith Birol over the weekend. Addressing reporters at a Group of Seven energy ministers' meeting in Kitakyush, Japan, Birol indicated that a spike in global demand could lead to a drawdown in stockpiles, helping bolster crude prices. Analysts expect global oil demand to grow by 1.2 million bpd this year, helping tighten a wide imbalance between supply and demand.
"I think the trend is that there's a decline of stocks worldwide and the stock building rate is slowing down considerably, we expect towards the stock draw will start to kick in," Birol told Reuters.
In addition, Birol said he would like to see upstream oil investments start to rebound in 2016, following a decline of roughly 40% over the last two years. The IEA expects Non-OPEC oil production to decline by 700,000 bpd in 2016, Birol said, representing the largest annual output decline in more than 20 years. Last month, the U.S. Department of Energy forecasted that Non-OPEC production will fall by 400,000 bpd this year, amounting to the sharpest decrease in eight years. Birol hopes to see a rebound in U.S. capital expenditures in 2017 after massive declines in each of the last two years, as crude futures have fallen more than 60% from their peak of $115 a barrel in June, 2015.
"What we would like to see is, after a big decline in 2015 and 2016, there will be a rebound in investments, bringing (investments) to the level of $600 billion once again," Birol added.
Elsewhere, shares in Halliburton Company (NYSE:HAL) gained 1.80% to 42.08 after the oilfield service provider announced it is dropping its proposed $28 billion merger proposal with Baker Hughes Incorporated (NYSE:BHI) in the face of heavy antitrust opposition from federal regulators. Baker Hughes shares lost 0.96 or 1.99% to 47.40.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.55% to an intraday low of 92.55, its lowest level since last July. Over the last six sessions, the dollar has tumbled more than 2.5%.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.