Oil prices fell early on Monday after U.S. unions called a refinery strike and traders cashed in on strong price gains last week when the market soared more than 8 percent on a sharp drop in U.S. drilling.
Brent crude oil futures were trading at $51.92 a barrel at and U.S. WTI futures were at $47.17 a barrel, both down $1.07 a barrel.
The drops followed a jump back from six-year lows on Friday, as a record weekly decline in U.S. oil drilling fuelled a frenzy of short-covering.
Asian oil markets also opened to news of a strike at U.S. refineries and chemical plants, potentially denting crude demand in coming days.
The United Steelworkers union called strikes at nine U.S. refineries on Sunday to bring about a new national agreement that covers workers at 63 refineries, accounting for two-thirds of U.S. refining capacity, said a source familiar with the union’s plans.
Despite Monday’s price falls, the jump late last week means that oil prices ended a run of range-bound trading following earlier steep falls.
International Brent benchmarks rose back above $50 per barrel for the first since early January, and they also jumped above its 15 exponential daily moving average (DMA) value, a key technical indicator, for the first time this year.
Analysts said that Monday’s falls were driven by technical factors.
Brent oil may break support at $51.72 per barrel and fall to $50.93, as indicated by its wave pattern and a Fibonacci projection analysis, said Reuters market analyst Wang Tao.
A sharp gain on Jan. 30 was driven by a wave C, the third wave of a three-wave cycle that developed from the Jan. 13 low of $45.19. The Fibonacci projection analysis on the target of this wave reveals it may have peaked around key resistance at $53, the 100-percent level, he added.
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