2017.08.1803:55:00UTC+00Oil Prices Retreat Despite Indications of Market Tightness

Crude prices fell on early Friday amid a broader market selloff and despite signs that the crude markets are gradually rebalancing.

Brent crude futures traded at $50.99 per barrel. The international benchmark for oil is down 4 cents from their last close. The Brent is set for a more than 2 percent decline this week. Meanwhile, U.S. WTI crude futures traded at $47.06 per barrel, falling by 3 cents. WTI is also poised for losses this week, down by around 3.5 percent.

The decline in oil prices occurred amid a broad-based selloff across markets, such as U.S. and Asian equities, amid increasing skepticism that U.S. President Donald Trump would be able to achieve his economic agenda.

The overall weakness in financial markets added to the belief that oil supply continues to outpace demand despite efforts by producers to lower production. OPEC, along with other non-OPEC producers, has pledged to limit production by 1.8 million bpd between January 2017 and March 2018.

Jefferies said that the sentiment in oil markets continue to be tepid. Oil prices are falling despite signs that crude markets are tightening. The Brent forward curve has shifted from contango into backwardation. Aside from this, signs of supply tightness are also seen in the U.S.