Oil prices declined for the first time in almost three weeks on Monday (25 April), as traders cashed in the profits and a strong dollar made its presence felt in the crude market.
As of 9.16am BST, front-month West Texas Intermediate was down 0.90% from its last settlement to $43.34 (£30.05, €38.52) a barrel, while Brent Crude futures were 0.71% lower to $44.79 a barrel.
Data released by oil services company Baker Hughes on Friday (22 April), showed the US rig count fell for a fifth consecutive week as a total of 343 rigs were drilling for new oil last week compared to more than 700 in the corresponding period in 2015.
"The oil price is seemingly ignoring the fundamentals," said Michael Van Dulken, head of research at Accendo Markets. "[Despite] coming back from rig count highs over the weekend, [it is] still trending up longer term despite no coordinated price-positive action from major oil producing nations."
A stronger dollar, the currency in which crude is traded, also played a part in the decline as it makes fuel imports for countries using other currencies more expensive. The greenback rallied on Friday on expectations the Bank of Japan would extend its monetary easing through negative interest rates.
Meanwhile, market data indicated the amount of open positions betting on rising WTI prices rose to its highest level in almost 12 months last week, while bets taken out in expectation of a renewed decline in oil prices fell close to 2016 lows.
Michael Hewson, chief market analyst at CMC Markets, said the rally over the past three weeks suggested investors were becoming more optimistic over the outlook of the oil market. However, he warned the feel-good factor sparked by the recent increase in prices could soon fade away as the market remains oversupplied.
"The continued rise in the oil price would appear to suggest that investors are making an assumption that the supply glut is on its way to becoming worked off and that prices could be set for another leg higher," Hewson said.
"While this may seem a reasonable assumption, caution remains warranted on the basis of the fundamentals given the oil market remains oversupplied as some in the market look to pick the top on a market that has already rebounded over 60% from its recent lows."
Analysts at Barclays also remained cautious over the outlook, indicating a number of macro-economic factors could potentially deal a fresh blow to crude prices as the fundamentals remained weak.
"Still-elevated inventory levels, the return of some disrupted supply, further boosts to Saudi and Iranian supply, and increased non-OECD product exports all have the potential to move prices lower over the next several months, especially if broader macro sentiment shifts," the bank said.