Investing.com -- U.S. crude futures retreated from 7-month highs from late last week, as Iran officials showed little signs of abandoning a long-term plan to boost exports, while investors digested a slowing decline in domestic rigs, thrusting concerns of oversupply back into focus.
On the New York Mercantile Exchange, WTI crude for June delivery traded in a broad range between $47.41 and $48.50 a barrel before settling at $48.13, down 0.28 or 0.58% on the session. Last Friday, the front month contract for U.S. crude hit 7-month highs testing $50 a barrel, a level it last reached in mid-October. On the Intercontinental Exchange (ICE), brent crude for July delivery wavered between $47.60 and $48.76 a barrel, before closing at $48.36, down 0.36 or 0.74% the day.
The spread between the international and U.S. domestic benchmarks of crude stood at 0.23, down from Friday's level of 0.32 at the close of trading.
Energy traders on Monday reacted to comments from Rokneddin Javadi over the weekend when Iran's deputy oil minister sent clearer indications that the Persian Gulf nation will not budge on a current strategy of ramping up exports to pre-sanction levels from 2007. At its current rate, Javadi said on Sunday that Iran is exporting 2 million barrels of oil per day, approaching a target of 2.2 million bpd by the middle of the summer. Javadi's comments cast further doubts on the likelihood a comprehensive output freeze can be achieved next when OPEC members convene at a highly-anticipated meeting in Vienna.
"Under the present circumstances, the government and the Oil Ministry have not issued any policy or plan to the National Iranian Oil Company (NIOC) towards halting the increase in the production and exports of oil," Javadi told Iran's Mehr news agency.
U.S. crude futures have surged more than 60% from their level in mid-February when WTI plunged to a 13-year low at $26.05. At the time, leaders from Russia and Saudi Arabia helped rescue persistently low oil prices by outlining a proposed agreement between four major producers to cap output at January levels. While expressing skepticism that a production freeze could be achieved last week, Russian energy minister Alexander Novak said that global supply is currently exceeding demand by 1.5 million bpd – far above the pace forecasted by a number of leading analysts in the energy industry. Last month, negotiations collapsed at a closely-watched summit in Qatar after Saudi Arabia insisted that Iran take part in any agreement aimed at freezing production.
Investors also continued to react to rig count data from last week for further signals on whether slumping U.S. production could be on the verge of hitting a bottom. Oil services firm Baker Hughes said Friday that U.S. oil rigs were unchanged last week at 318, halting an 8-week streak of weekly declines. The combined Oil and Gas rig count for the week ending on May 13 fell by two to 404, dropping to the lowest level since the series was launched in 1947.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, lost more than 0.10% to an intraday low of 95.21, retreating from 3-week highs. The index has crashed by more than 4% since early-December.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
Despite the current rally in oil, the price of crude is still down sharply from its level in June, 2014, when it peaked at $115 a barrel.