Crude oil prices extended their losses early on Monday, after the biggest weekly fall in two years on supply hopes driven by a truce between the United Arab Emirates and the Iran-aligned Houthi group that would halt military operations on the border, alleviating some concerns about potential supply issues.
In addition, the US supply boost from its Strategic Petroleum Reserve (SPR) release also weighed on oil prices.
The benchmark Brent crude futures were down 0.8 per cent to $103.6 per barrel after losing 13 per cent last week, its biggest weekly fall in two years.
US West Texas Intermediate crude was at $98.45 a barrel, down about 0.8 per cent, with both contracts having slipped $1 in early Asia trade on Monday.
"The early losses this week come after oil prices settled down around 13 per cent last week - their biggest weekly fall in two years - when US President Joe Biden announced the largest-ever US oil reserves release. According to Japan's industry ministry, member countries of the International Energy Agency (IEA) committed to another coordinated oil release in an extraordinary meeting," said Rahul Kalantri, Vice President for commodities at Mehta Equities.
The US administration announced that up to 1 million bpd of oil would be sold from their SPR for six months starting in May to bridge the gap until producers can boost output and bring supply back into balance with demand.
The US Energy Department formally outlined a sale of oil from emergency reserves, while the International Energy Agency members also agreed to release more oil on Friday.
"The joint efforts of the US and its allies could temporarily balance off the supply shortfalls in 2022, but it might not be a long-term solution," Tina Teng, a markets analyst at CMC Markets APAC & Canada, in a note, reported by Reuters.
"Also, the US oil producers may be reluctant for an output increase to keep profit high."
Demand concerns at China, the world's top oil importer, persist as Shanghai's most populous city, has extended COVID-19 lockdowns.
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