Oil prices fall, while demand for U.S. Treasuries stays strong
Oil prices regained some ground on Monday afternoon but remained down as investors grappled with persisting concerns about rising U.S. output, while demand for U.S. Treasuries stayed strong despite increased supply, APA reports quoting Reuters
Crude prices rose on Friday after the U.S. economy added the biggest number of jobs in more than 1-1/2 years in February. But U.S. crude CLcv1 fell as much as 2.21 percent on Monday, to $60.67 per barrel, before bouncing back to $61.35, down 1.11 percent.
“It just looked like some profit taking,” said Jim Ritterbusch, president of energy advisory firm Ritterbusch & Associates.
Brent LCOcv1 was last at $64.96, down 0.81 percent on the day.
Energy investors are weighing increased U.S. supply against the likelihood that the Organization of the Petroleum Exporting Countries will maintain supply cuts that have been in effect more than a year.
“The market continues to flip back and forth on the idea that increased global demand and a production cut is going to support prices ... but U.S. production, and North American production levels in general, is going to negate a lot of the impact of that,” said Gene McGillian, director of market research at Tradition Energy.
Friday’s strong U.S. payroll data, which showed a hefty 313,000 rise in jobs but tempered growth in hourly earnings, supported Treasuries in Monday trade.
Benchmark 10-year notes US10YT=RR last rose 8/32 in price to yield 2.8663 percent. That is not far off the 2.957 percent yield on Feb. 21, the highest since the instrument yielded more than 3 percent in January 2014.
The Treasury on Monday sold $28 billion of three-year notes and $21 billion of the 10-year notes, in what analyst George Goncalves called an “on-the-screws type auction.”
Increased supply did not quell demand for the notes, a positive sign for the heavy issuance expected in the year ahead.
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