NEW YORK, May 23 (UPI) -- Crude oil prices retreated into negative territory Monday after supply constraints eased in Canada and optimism resurfaced in war-torn, and oil-rich, Libya.
Canadian authorities during the weekend said they would allow for the voluntary re-entry into oil sands areas previously deemed off limits because of wildfires in Fort McMurray. While fires continue to burn out of control, authorities are preparing for full resettlement starting June 1. The top oil exporter to the United States, the Alberta wildfires had idled around 1 million barrels per day worth of production.
Crude oil prices rallied in early May as market indicators suggested a return to a balance between supply and demand was emerging. Canadian outages put negative pressure on the supply side, though figures released last week by oil services company Baker Hughes on exploration and production trends suggested lingering durability for the downturn.
Crude oil prices turned lower at the start of trading Monday. The price for Brent crude oil was down 1.6 percent to open at $47.93 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was off 1.5 percent to start trading in New York at $47.65 per barrel.
Last week's rig count from Baker Hughes show Texas and North Dakota, the top two oil producers in the United States, saw the steepest declines. Energy companies continue to cut costs during the downturn, though figures from the U.S. Energy Information Administration show the United States was the top oil and gas producer in the world last year. Even as Saudi Arabia's output increased 3 percent year-on-year, EIA said U.S. production was far more than Saudi Arabia's last year.
Oil started flowing out of Libya last week as the United Nations worked with rival political factions to address governing issues that divided the country after civil war erupted in 2011. Libya remains well below its full potential production of more than 1 million barrels per day and U.S. officials warned recently there may be spoilers still looking to undermine recent progress.
In economic terms, a report Monday from Moody's Investors Service said Chinese economic performance could be mixed as regions exposed to commodities risks may lag behind the rest of the country. Improved sentiment on Chinese demand had put positive pressure on crude oil prices, and Moody's said that, overall, economic stabilization is underway across the board.