A lack of liquidity has contributed to volatile trading in oil with limited a retreat from best levels triggered in part by a measured dollar recovery.
Oil prices were again subjected to choppy trading during US trading on Monday. After a slide to lows just above $47.10 p/b, WTI moved steadily higher to a peak around $47.70 p/b with some support from a fresh dollar decline.
Although there was confidence in a gradual draw-down in global inventories, there was also caution given that the oil market remains well supplied, especially with increased US production.
According to OPEC sources, compliance with agreed production cuts dipped to 94% in July from 98% in June, although there were no other major developments at the technical meeting.
Prices dipped lower into the US open with sentiment undermined to some extent by reports that the Libyan Sharara field had returned to production.
The dollar also gained some respite against major currencies and WTI settled near $47.50 p/b in early US trading with Brent trading around $51.60 after failing to hold above the $52.0 p/b level.
Attention will switch back to the inventories data with the API data due after the market close on Tuesday and the EIA data on Wednesday.
The consensus forecast is for a further decline in stockpiles of over 3.0 million barrels for the latest week.
Markets will be looking ahead to autumn trends with some expectations of increased US exports, especially as the spread between WTI and Brent has widened. Markets will be braced for an erratic figure form the API data after recent sharp weekly fluctuations.
Oil Prices 4-Hour Chart