Oil prices fell 3 percent in thin trading on Monday, as the geopolitical concerns that underpinned last week’s rally faded.
Crude futures had risen in overnight trading, lifted by a drop in drilling activity in the United States and concerns that Washington could reintroduce sanctions against Iran, OPEC’s third-biggest oil producer.
U.S. WTI crude futures ended Monday’s session down $1.93, or 3 percent, at $63.01 a barrel, after finishing the first quarter up 7.5 percent.
Brent crude futures were down $1.59, or 2.3 percent, at $67.75 per barrel by 1:55 p.m. ET, having nearly touched the contract’s 2018 high of $71.28 last week.
Trading volume was lower than normal as many countries were still on Easter holiday.
Tensions between Saudi Arabia and Iran, two of OPEC’s top three crude producers, have somewhat receded, though traders were still covering bets that oil prices would fall heading into the long holiday weekend, analysts said.
“With nothing happening and no catalyst to keep it up here, you’re starting to see this weak length coming out of the market,” said John Kilduff, founding partner at energy hedge fund Again Capital.
“The anxiety just comes racing out of the market if nothing happens.”
President Donald Trump has threatened to pull out of a 2015 international nuclear deal with Tehran under which Iranian oil exports have risen. He has given the European signatories a May 12 deadline to “fix the terrible flaws” of the deal.
Those concerns have been amplified by Trump’s nominating Iran hardliner Mike Pompeo to be secretary of State and naming noted hawk John Bolton as national security advisor, said Tom Kloza, global head of energy analysis at Oil Price Information Service.
“Those two guys have probably propped up crude by a couple dollars a barrel, pending appointments or confirmation,” he told CNBC.