West Texas Intermediate for July delivery fell as much as US$2.08 to US$65.80 a barrel on the New York Mercantile Exchange and traded at US$66.79 at 3.55pm in Tokyo.
"But at the same time there are some worries over a fall in USA oil demand if more Middle East crude supplies flow into the market", Hwang said.
Oil prices fell on Monday, extending a steep decline in the previous session, as the market eyed an increase in output from the world's three top crude producers, Russia, the United States and Saudi Arabia.
But even if Asia and Europe are keen to take more U.S. crude, the record volumes are straining export infrastructure in the United States, limiting its ability to pump and ship more oil.
This reversal is in line with our baseline view that the rally in oil prices was a deviation from market supply-demand fundamentals and a moderation is oil prices was in the offing. The joints efforts managed to buoy the oil prices into interstellar prices.More news: CATASTROPHIC flash flood in Ellicott City Maryland as state of EMERGENCY declared
Saudi Arabia and Russia's potential policy shift doesn't materially change Goldman Sachs Group Inc.'s bullish oil outlook, the bank's analysts including Damien Courvalin said, reiterating a forecast of Brent at US$82.50 in the third quarter.
China has also raised concerns about whether enough oil is being pumped, according to a Saudi statement issued after Energy Minister Falih called China's energy chief on Friday to discuss cooperation between their countries and to review the oil market.
Oil prices came under pressure last week after media reports that the Organization of the Petroleum Exporting Countries and Russian Federation are discussing plans to lift their production for the first time since 2016.
Selling half the reserve over a full decade would have limited impact on world oil prices. There is no settlement on Monday because of the US Memorial Day holiday. USA production broke 10 million bpd for the first time in 48 years in November. Further, since the election win of President Nicolas Maduro, the risk of United States imposing sanctions on Venezuela's oil industry have risen and if imposed could lead to further supply disruptions.
West Texas Intermediate crude oil fell significantly during the trading session on Friday, as the U.S. dollar continues to strengthen, and of course there is talk now that perhaps the production cuts coming out of OPEC's recent meetings may be coming to an end. U.S. President Trump last month criticized OPEC for contributing to higher crude. The current rig count globally is now above the average that was set in 2017.