Nov. 19 (UPI) -- Crude oil prices were lower Monday morning at the start of a holiday-shortened week that will see reduced volume as traders and investors tested recent lows, and also as the front-month WTI contract was set to move January.
As of 10:26 a.m. EST Brent crude front-month prices fell 1.2 percent to $65.95 per barrel, while WTI front-month was 1.1 percent lower to $56.06 per barrel, partly recovering from deeper declines earlier in the session.
"We are now trading the January 2019 WTI Crude Contract on the Globex-Nymex exchange as today is the last trading day for the December 2018 futures contract," John Thorpe, a commodity broker at Los Angeles-based Cannon Trading, told UPI.
"Although markets may seem to function irrationally, nearly every market will re-test recent highs and lows," Thorpe said.
"The WTI crude market will spend the first half of today's trade 'testing' recent lows. So far the daily lows from Friday and Thursday of last week have been violated and today's price action is currently testing last Wednesday's low of $55.38 per barrel, on the way to testing last Tuesday's bottom of $55.11 per barrel," he said earlier in the day, when prices were lower.
Trading for the rest of the week will likely remain "sloppy" and with lower volumes of trading, given Thursday's Thanksgiving holiday and a shortened session on Friday, he added.
A belief by market participants in OPEC and Russia's resolve to agree on productions cuts in a bid to push the price higher "is not to be believed until the results are seen while The Baker Hughes North American Rig count continues to increase on a week over week basis," he said.
A belief that the market is oversupplied due to production increases by the world's top crude oil producer, the United States, has led to concern about a supply-demand imbalance. The belief that OPEC may announce production cuts in a December 6 meeting in Vienna helped fuel gains at some points during the second half of last week.
The concern related to crude oil oversupplies was intensified on Nov.5, when the U.S. announced waivers so that eight nations could continue to buy Iranian oil despite nuclear-related sanctions announced in May, that went into effect on that day. The market had not anticipated such large waivers.
WTI may even test the low of $54.72 per barrel it hit back in February, Thorpe said.