By Tunde Osho (with agency reports)
Oil prices on Monday extended declines from the end of last week amid a wider market selloff and a stronger dollar, with Brent crude falling to its lowest in nearly a month.
Brent was down 57 cents, or 0.8 percent, at $68.01 a barrel at 0716 GMT, after falling 1.5 percent on Friday. Brent’s weekly drop was 2.75 percent last week.
U.S. West Texas Intermediate (WTI) crude declined 47 cents to $64.98 a barrel, after dropping 0.5 percent in the previous session. WTI fell by 1 percent during the last week.
“Oil is caught up in this general risk-off move, not helped at the margins by a little bit of strength in the U.S. dollar,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Asian shares were down the most in more than a year on Monday as fears of resurgent inflation battered bonds.
Wall Street dropped last week from record highs as inflation concerns sparked speculation that central banks globally might be forced to tighten policy more aggressively.
The three major U.S. indexes capped their worst weekly losses in two years, after closing at record highs the previous week.
“The size of the move in U.S. equities doesn’t always mean this, but usually after a move like that and particularly when it follows such a long uptrend, there is follow through selling,” Spooner said.
Rising U.S. oil production has also helped push down oil prices, undermining attempts by the Organization of the Petroleum Exporting Countries to support prices.
Data from the U.S. government last week showed that output climbed above 10 million barrels per day in November for the first time since 1970, as shale drillers expanded operations after gains in oil prices last year.
“Over the course of the next few weeks one of the key things is going to be U.S. production data and whether the increase in shale rigs recently is going to increase,” Spooner said.
U.S. energy companies did add oil rigs for a second week in a row last week, energy services company Baker Hughes Inc reported on Friday. Drillers added six oil rigs in the week to Feb. 2, bringing the total to 765.
Hedge funds and money manager reduced last week their bullish positions on U.S. crude, cutting their net-long positions from a record after three weeks of increases.
The speculator group cut its combined WTI futures and options positions on New York and London exchanges by 18,365 contracts to 531,235 in the week to Jan. 30, the Commodity Futures Trading Commission reported on Friday.