This was when the market soared on a sharp drop in US drilling.
Despite the decline, analysts said that record open interest – the number of outstanding futures contracts – indicated that prices may have bottomed out.
Brent crude oil futures were trading at 51.60 dollars a barrel at 0440 GMT, down 1.39 dollars, while US WTI futures were at 46.96 dollars, down 1.28 dollars a barrel.
The declines followed a jump back from six-year lows on Friday, as a record weekly decline in US oil drilling fuelled a frenzy of short-covering.
“Oil production in the shale basins will inevitably decrease as weaker, higher-cost producers shutter their operations. This supports our view that oil prices will recover this year and average 60 dollars per barrel for Brent,” Nomura said.
While the potential drop in U.S. oil output could lift markets in the mid-term, analysts said Monday’s declines were a result of profit-taking after last week’s gains, as well as rising output by OPEC that was offsetting lower US drilling.
Asian oil markets also opened to news of a strike at US refineries, potentially denting crude demand in coming days.
The United Steelworkers union called strikes at nine US refineries on Sunday to bring about a new national agreement that covers workers at 63 refineries, accounting for two-thirds of US refining capacity, said a source familiar with the union’s plans. The walkouts would be the first in support of a national accord since 1980.
Despite Monday’s falls, the jump late last week means that oil prices ended a run of range-bound trading within clear trend lines in January, following steep falls in 2014.
Along with returned volatility, Brent’s Intercontinental Exchange open interest rose to a record of almost 1.7 million by the end of last week, in a signal that traders have taken on new positions when prices hit new lows last month.
Brent rose back above 50 dollars per barrel for the first time since early January last Friday, and its price also jumped above its 15 exponential daily moving average (DMA) value, a key technical indicator, for the first time this year.