Oil prices follow broader markets lower

Feb. 5 (UPI) -- Crude oil prices followed broader stock market indices Monday, trending lower on rising U.S. output and fears of increasing inflationary pressures.

U.S. stock markets last week experienced one of their worst contractions in years and Chinese markets closed mixed on Monday, while all major indices in the U.S. market point to another down day on Wall Street.

U.S. data last week sparked concerns about the pace of inflation. The government reported Thursday that worker productivity was down, though hourly earnings had improved throughout the year by 2.9 percent, the highest in nearly a decade.

Taking the helm at the U.S. Federal Reserve on Monday, Chairman Jerome Powell hinted at broader action on U.S. economic stability, noting the world's largest economy is more resilient than it was before the financial crises during the last decade.

"We intend to keep it that way," he said in his introductory remarks.

For oil prices, contraction came in response to poor quarterly earnings from Exxon Mobil and Chevron. On Monday, Hess Corp. reported it cut its headcounts in January and posted a loss for the fourth quarter, its 13th in a row.

The price for Brent crude oil was down 1.17 percent as of 9:15 a.m. EST to $67.78 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.81 percent to $64.92 per barrel.

The price for Brent crude oil hit $70 per barrel in January, a multi-year high driven by strong compliance with an effort by the Organization of Petroleum Exporting Countries to balance an oversupplied market with production cuts. That effort has supported crude oil prices, but also drove production from the United States, which is now rivaling Saudi Arabia as a producer.

Giovanni Staunovo, a commodity analyst for UBS, told UPI a variety of factors, apart from the broader market selloff, were pulling oil prices lower.

"A combination of factors such as the risk off environment, a stronger U.S. dollar and rising oil rigs has weighed on oil prices on Monday," he said.

The U.S. dollar usually has an inverse relationship to the price of oil. Comments from U.S. Treasury Secretary Steven Mnuchin seen as supporting a weaker dollar last month pushed oil prices sharply higher.

On Friday, Baker Hughes reported one less rig working in the United States, but four more in Canada, balancing for net gains across North America. Increases in rig counts, which serve as a loose gauge for exploration and production activity, could suggest future production growth.