Oil fell to below $64 a barrel on Monday as rising supply from OPEC+ and higher Iranian output countered signs of a strong economic rebound in the United States and expectations of a wider demand recovery in 2021.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed on Thursday to monthly production hikes from May to July. OPEC member Iran, exempt from making voluntary cuts, is also boosting supply.
Brent crude for June fell $1.36, or 2.1 percent to $63.50 a barrel by 1120 GMT. U.S. West Texas Intermediate crude for May dropped $1.29, or 2.1 percent to $60.16.
“The OPEC+ decision, perhaps nudged along by increasing Iranian production heading to China, probably means we have seen the best of the oil rally now for the next few months,” Jeffrey Halley of brokerage OANDA said.
Oil has recovered from historic lows last year with the support of record OPEC+ cuts, most of which will remain after July, and some oil demand recovery that is expected to gather pace in the second half of the year.
While a slow vaccine rollout and return to lockdown in parts of Europe have weighed on the rebound, figures on Friday showed the U.S. economy created the most jobs in seven months in March, with all industries adding jobs.
“The seemingly invincible accelerating U.S. recovery has offset OPEC+’s announcement on Thursday,” Halley said.