Oil slips for second session, as stronger dollar weighs; Global demand eyed

On Monday crude oil futures slipped for the second consecutive session, as fears that U.S. shale production could rebound in the months ahead and a stronger U.S. dollar weighed.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July was at $59.31 a barrel, down $0.67 in the Globex electronic session.

On London’s ICE Futures exchange, July Brent crude fell $0.20 to $65.17 a barrel.

Last week, U.S. oil prices lost 1.4%, interrupting a three-week winning streak and ending the week below the $60 mark. In London, Brent crude lost 2.2% last week and has been down for two of the past three weeks.

The dollar recovered versus major currencies putting oil under pressure. Worries about Greece were a part of that action.

Signs of stronger oil demand both in the U.S. and China, two of the world’s largest oil consumers, have supported oil prices in recent weeks.

Industry research group Baker Hughes said that the number of rigs drilling for oil in the U.S. fell by only one last week to 659, marking the 24th straight week of declines.

Markets have been closely eyeing the declining rig count in recent months for signs it will eventually decrease the glut of crude flowing into the market. However, the rate of decline has slowed in recent weeks, spurring concerns that some shale oil companies will dial up their output in the months ahead if prices stabilize near current levels.

“For oil, the burden of proof has shifted to how U.S. producers will respond to the recent rally and whether low-cost producers can sustainably deliver higher production,” analysts at Goldman Sachs said in a report over the weekend.

The body said its estimate for sustained low prices has not been fulfilled, delaying the rebalancing of the oil market, due to a combination of abundant capital entering the U.S. oil sector, the perception of improving fundamentals stemming from lower capex and rig-count, and higher than expected global demand.