Investing.com - Oil prices slumped on Monday, erasing some of last week’s strong gains from an agreement among major producers to curb output in the coming year, while analysts debated whether the deal is enough to rebalance the market.
New York-traded West Texas Intermediate crude futures fell 96 cents, or 1.82%, at $51.65 a barrel by 9:02 AM ET (14:02GMT).
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded down 78 cents, or 1.26%, to $60.89.
OPEC announced Friday that it will reduce overall production among its members by 1.2 million barrels per day (bpd) during the first six months of 2019 in an effort to stave off a global glut in supplies and prop up prices.
The cartel will curb output by 0.8 million bpd from October levels, while non-OPEC allies contribute an additional 0.4 million bpd of cuts, in a move to be reviewed at a meeting in April.
The agreement initially sent oil prices sharply higher. West Texas Intermediate and Brent ended the week with gains of around 3.3% and 5% respectively.
U.S. bank Morgan Stanley said the cut was "likely sufficient to balance the market in 1H19 and prevent inventories from building".
It added that it expected "Brent to reach $67.5 per barrel by 2Q19, down from $77.5 before."
Merrill Lynch said the reduction "should lead to a relatively balanced global oil market and will likely push Brent and WTI prices back to our respective expected averages of $70 per barrel and $59 per barrel in 2019."
But the bank still warned on Monday that “the surge in U.S. supply in recent months should be a reason for caution”.
Along similar lines, Edward Bell of Emirates NBD bank said “the scale of the cuts ... isn't enough to push the market back into deficit” and that he expected “a market surplus of around 1.2 million bpd in Q1 with the new production levels”.
In other energy trading, gasoline futures lost 0.51% to $1.4613 a gallon by 9:04 AM ET (14:04GMT), while heating oil fell 0.87% to $1.8698 a gallon.
Lastly, natural gas futures traded down 1.31% to $4.429 per million British thermal units.
-- Reuters contributed to this report