April 18 (UPI) -- A strong U.S. dollar and an even stronger response in the U.S. shale oil sector helped push crude oil prices into negative territory in early Tuesday trading.
Crude oil prices were lower in light trading Monday, muted by the weekend Easter holiday. Prices drifted into negative territory in response to steady gains in U.S. exploration and production activity, reported as rig counts by oilfield services company Baker Hughes.
A monthly drilling report from the U.S. Department of Energy suggested domestic production, already on the rebound from last year's slump, could grow by another 124,000 barrels per day in May.
"The DOE weekly report has been showing a weekly increase in U.S. production of about 30,000 barrels per day per week, and that is not going to stop," Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in a daily newsletter. "If anything the weekly increase could start to accelerate."
Crude oil prices last year collapsed below $30 per barrel as the market tilted toward the supply side in response to U.S. shale activity and a decision from the Organization of Petroleum Exporting Countries to defend a market share with more production. OPEC in January enacted a ceiling on production and U.S. shale oil has responded to the improved market conditions with gains.
With U.S. oil potentially contributing to supply-side worries, the price for Brent crude oil was down 0.7 percent about a half hour before the start of trading in New York to $54.98 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.6 percent to $52.34 per barrel.
British markets were upended by the announcement from Prime Minister Theresa May that snap elections were scheduled for June 8 in order to facilitate negotiations to divorce from the European Union.
"Britain is leaving the European Union and there can be no turning back," she said in her address.
Markets were unnerved by the announcement, though much of the immediate impact of the so-called Brexit has already been factored in. Oil prices were hit somewhat by sentiments from U.S. economic planners that a stronger dollar was a net positive for the world's leading economy.
"Overall this did not help the mood of the commodity sector that is acting like it had too many Easter eggs," Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in a daily newsletter. "Both precious metals and industrial metals are taking a hit and that is not helping oil as the market sells off in a light-volume frenzy."